A young engineer is considering to built a 25unit apartment near a commercial center.Because of the location, the investment can guarantee a 90% occupancy rate. So then, theproject can have an earnings of 20% annually. Other data are the following:LandP10MBuilding cost14MProjected Useful lifeCost of land after 20 years20 years38MCost of Building after 20 yearsRent/unit/month3.8M13,000.00Maintenance/unit/yearProperty TaxesBuilding Insurance2,200.002%0.7%Is this a good investment? Apply the methods of economic studies.

Net Present Value method is used to determine whether the proposal should be selected or rejected…

A young engineer is considering to built a 25unit apartment near a commercial center. Because of the location, the investment can guarantee a 90% occupancy rate. So then, the project can have an earnings of 20% annually. Other data are the following: Land P10M Building cost Projected Useful life Cost of land after 20 years 14M 20 years 38M Cost of Building after 20 years Rent/unit/month 3.8M 13,000.00 Maintenance/unit/year Property Taxes Building Insurance 2,200.00 2% 0.7% Is this a good investment? Apply the methods of economic studies.

A young engineer is considering to built a 25unit apartment near a commercial center. Because of the location, the investment can guarantee a 90% occupancy rate. So then, the project can have an earnings of 20% annually. Other data are the following: Land P10M Building cost Projected Useful life Cost of land after 20 years 14M 20 years 38M Cost of Building after 20 years Rent/unit/month 3.8M 13,000.00 Maintenance/unit/year Property Taxes Building Insurance 2,200.00 2% 0.7% Is this a good investment? Apply the methods of economic studies.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Use the following information for problems 4, 5, 6, and 7 A project initially costs $40,000 and has a 10 year lifetime. The project returns benefits of S10,000 at the end of the first year, increasing by 12% in each of the following years. Costs are incurred at a rate of S4,000 per year. The anticipated salvage value is S7,000. MARR = 15%. 4. The benefit/cost ratio is closest to ... a) 1.24 b) 1.27 c) 1.30 O 1.33 e) 1.37 ) 1.41 g) 1.43 h) 1.45 5. The simple payback period is closest to ... D4.7 years b) 3.5 years c) 8.1 years d) 4.9 years e) 4.5 years f) 4.1 years g) 8.4 years h) 5.7 years i) a payback period does not occur
You are evaluating the purchase of an apartment complex in East Memphis. It will cost $15 million to purchase and bring up to code. In Year 10 you will have to install a new roof at a cost of $5 million. Your net rental income should be $5 million per year for the 20-year life of the project. Use the MIRR method with a borrowing rate of 12% per year and a reinvestment rate of 18% per year to determine the external rate of return for this project. You must draw a correct cash flow diagram to get full credit for this problem and you must show your work. NOT ON EXCEL PLEASE
An entrepreneur wants to establish a facility by spending 250 USD in the first year, 300 USD in the second year, and 350 USD in the third year. Since the capital cost of this project is 32%, what is the investment amount
You are responsible to manage an IS project with a 4-year horizon. The annal cost of the project is estimated at $40,000 per year, and a one-time costs of $120,000. The annual monetary benefit of the project is estimated at $96,000 per year with a discount rate of 6 percent. a. Calculate the overall return on investment (ROI) of the project. b. Perform a break-even analysis (BEA). At what year does break-even occur?
Use Annual Worth method to calculate the benefit/cost ratio at i = 6% for a new library. The first cost is $500K, and O&M costs are $100K per year. There is no salvage value after 30 years. Community benefits are estimated to be $130K per year. Is the library economically justified? Write a brief interpretation of your answer
Three building proposals are being considered by the owner, which proposal is more economical if money is worth 18% compounded semi-annually. (using Future as focal/reference point) A building to be constructed now costing P1.5M, or A smaller building costing P1M now, and an additional room costing P0.5M to be constructed after 5 years, or A single story building costing P.8M now and 2nd floor costing P0.7M to be constructed after 5 years
An investor is considering financing a toll highway for $120 million. They expect to get $11 million in toll fees for each of the 30 year period they will manage the facility, but they need to pay $8 million at the end of the period to repave the highway. What is the IRR of this investment? Is is a good idea if the MARR of this company is 10% per year?
Consider the following Table: 1. Draw the chash flow diagrams for (A, B and C) alternatives 2.Compare (A, B and C) alternatives and choose the best one
Required: a. Calculate the standard deviation of returns of each service provider. b. Which service provider would you recommend for Mr. Lutombi to invest in? c. Assuming Mr. Lutombi invests 40% of his money in MTC and the rest in Telecom, what is Mr. Lutombi portfolio return?
A startup company has a fixed capital investment of Ph 500,000 and minimum working capital. The salvage value is set at Php 15,000. Calculate the a) Return on Investment and b) the Payback Period. If the mar is 25%, is the project profitable or not? Year After Tax Earning 1 201079.1 2 49051.48 3 145381.1 4 89021.41 22509.13 221273.2 7 134490.4 8 273262 9 146166.3 10 63456.84
A project yields annual benefits of 75,000 for 10 years with 0 salvage value. It is designed to have a benefit cost ratio of 2. Determine the cost of the project if money is worth 10%
Please view the following video before answering this question. Video Example 4.3 Click here to access the TVM Factor Table Calculator Consider a palletizer at a bottling plant that has a first cost of $141,000, operating and maintenance costs of $16,500 per year, and an estimated net salvage value of $23,500 at the end of 33 years. Assume an interest rate of 6.00%. What is the present equivalent cost of the investment if the planning horizon is 33 years? O $387,900 O $362,900 O $372,363 O $423,400

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