Optimum Properties Corp. is considering the construction of a 50-unit condominium near theUniversity Belt area. The 15-year investment study shows the following data:DisbursementsRevenueLandP8000 000.00Land, after 15 yrsP43 000 000.00Building25 000 000.00Bldg, after 15 yrs8600 000.00300 000.00Maintenance/yrInsurance & Tax/yrRent/unit-yr120 000.001.2%With an estimated occupancy rate of 92% at all times, validate the acceptability of the project usingthe IRR method. The company applies a 15% MARR on its investments(Ans. Project is acceptable, 15.7%)

The Internal Rate of return: The internal rate of return is the capital budgeting technique used to…

Optimum Properties Corp. is considering the construction of a 50-unit condominium near the University Belt area. The 15-year investment study shows the following data: Disbursements Revenue Land P8000 000.00 Land, after 15 yrs P43 000 000.00 Building 25 000 000.00 Blds, after 15 yrs 8600 000.00 300 000.00 Maintenance/yr Insurance & Tax/ya With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using Rent/unit-yr 120 000.00 1.2% the IRR method. The company applies a 15% MARR on its investments (Ans. Project is acceptable, 15.7%)

Optimum Properties Corp. is considering the construction of a 50-unit condominium near the University Belt area. The 15-year investment study shows the following data: Disbursements Revenue Land P8000 000.00 Land, after 15 yrs P43 000 000.00 Building 25 000 000.00 Blds, after 15 yrs 8600 000.00 300 000.00 Maintenance/yr Insurance & Tax/ya With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using Rent/unit-yr 120 000.00 1.2% the IRR method. The company applies a 15% MARR on its investments (Ans. Project is acceptable, 15.7%)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 11P

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