Resale va to be in ather a. Using benefit-cost ratio analysis and and 8% MARR, determine which alternative, if any should be selected? b. Compute the IRR for each alternative.
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- 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 Bldg, after 15 yrs 8600 000.00 300 000.00 Maintenance/yr Insurance & Tax/yr Rent/unit-yr 120 000.00 1.2% With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using the IRR method. The company applies a 15% MARR on its investments (Ans. Project is acceptable, 15.7%)The following information related to a real estate asset investment that is fully financed using REITS equityProject costs:Land. Ksh 300000Buildings. Ksh 2500000Total costs. Ksh 2800000Operating data:Initial rent Ksh 522100Growth in rent. 8% per yearVacancy rate. 6% of gross rentOther income. 1% of gross rentOperating expenses. 16% of gross rent for one yearGrowth in expenses. 7% per yearGrowth in resale price. 6%Selling expenses. 5% of resale priceDepreciation (straight line 27.5 years, mid-month convention Put at service at beginning of the year)Holding period. 5 yearsMarginal tax rate. 30%Capital gains tax rate. 15%Depreciation recovery tax rate. 25%Estimated sale price. Ksh 3747032Selling expenses. Ksh 187352 Required:a). Operating cash flows for the first 5 yearsb). After tax cash flows from the sale of propertyc). Net present value assuming cost of capital of 15%d). What are the factors that will be considered before investing in the assetA man decided to Invest in an equipment worth PHP 12,000,000.00 capital with the following data: Expected revenue - PHP 5.8M/year Cost of Operation and Maintenance - PHP2.4/year Taxes and Insurance. - 2% of the first cost/year Expected earnings is 12% minimum Life of the equipment is 5 years with expected value of PHP1.2M after 5 years a. Determine the desirable investment using ROR method and AW method b. What are the ways and means to make it desirable investment c. In what case we should use the present worth and future worth method of economy study?
- A man planned of building a house. The cost of construction is Php800,000 while annual maintenance cost is estimated at Php15,000. If the interest rate is 6%, what is the capitalized cost of the house? ANSWER WITH COMPLETE SOLUTIONA Real Estate Investment Company (REIC) has a weighted average cost of capital at 10% and $2 million of total capital to invest. The REIC aims to earn rental income from the investment and do not intend to sell the property in the short term. Which of the following property is the most appropriate one to invest? Select one: a. Property A: 8% Cap Rate, NOI $400,000 b. Property A: 11% Cap Rate, NOI $180,000 c. Property A: 10% Cap Rate, NOI $100,000 d. Property A: 12% Cap Rate, NOI $300,000 None of the above eThe direct capitalization method can be used to quickly value a building. You are evaluating a property that produces gross rent of $524,000 per year with an expected NOI of $247,000 per year. Similar properties have traded with a cap rate of 4.5% and and a GIM of 8.5. What is the value of the subject property based on the direct capitalization method?
- You are given the task to evaluate the value of a rental property. You identified similar properties and calculated average cap rate is 15%. You estimated the property's Net operating Income to be $570,000. What is the maximum price you would pay for the property? Group of answer choices $3.5 million $655,000 $3.8 million $5.7 millionSuppose that a site can be developed a rental property at a cost of $500,000 with a annual NOI of $65,000. Assuming the cap rates for the building and for the land are 10% and 8% respectively. Calculate the value of the land? O $187,500 O $155,622 O $123,159 O None of the given answers O $118,687An office complex measuring two hundred and three metre square(203m^2) has being offered for sale.The cost of replacing the asset and depreciation is estimated at $1200 and 10% respectively. I. Calculate the market value of the office complex II. If an extension of fifty two metre square (52m^2) has being made to the office complex to be used as a residential facility.Calculate the capital value of the residential facility at a rate of nine hundred metre square(900m^2) a depreciation of 4%. III.If land comparable land values is assessed at $30000. Calculate the value of the subject property.
- Consider a new residential income producing property for sale to a potential investor. The sale price for the property is Sh. 1,250,000 of which building is Sh. 1 million and balance land. Building is depreciated over 50 years. Rent is estimated at Sh. 200,000 in the first year and is expected to grow at 3% p.a. thereafter. Vacancies and collection losses are expected to be 10% of rent. Operating expenses will be 31.5% of rent. A 70% mortgage loan can be obtained at 11% p.a. payable monthly for 30 years. The property is expected to appreciate in value at 3% per year and is expected to be owned for five years and then sold. Tax rate for both income and capital gains is 30%. Required Calculate the expected after tax IRR on equity invested. Is this investment viable if required rate of return is 15%?Pads Corp. is contemplating the purchase of a large stamping machine which will cost Php 500,000. With additional transportation and installation costs of Php 40,000 and 65,000. Its market value the end of 5 years is estimated at Php 75,000. What is the accumulated depreciation at the end of year 4 using, (a) declining balance method? (b) sum of the years method? (c) sinking fund method (9%)? Round off your answers to the nearest 2 decimal places.A man planned of building house. The cost of construction is P500,000 while annual maintenance cost is estimated at P10,000. If the interest rate is 6%, what is the capitalized cost of the house?
