A developer plans to start construction of a building in one year if at that point rent levels make construction feasible. At that time the building will cost $1,340,000 to construct. During the first year after construction would take place, there is a 60 percent chance that NOI will be $175,500 and a 40 percent chance that the NOI will be $88,600. In either case, NOI would be expected to increase at 2 percent per year after the first year. Required: How much should the developer be willing to pay for the land if he wants a 12 percent rate of return? (Round your answer to the nearest whole dollar amount.)
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- Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.A developer plans to start construction of a building in one year if at that point rent levels make construction feasible. At that time the building will cost $1,000,000 to construct. During the first year after construction would take place, there is a 60 percent chance that NOI will be $150,000 and a 40 percent chance that the NOI will be $75,000. In either case, NOI would be expected to increase at 2 percent per year after the first year. Required: How much should the developer be willing to pay for the land if he wants a 12 percent rate of return? could you show me on excel? thank youA developer plans to start construction of a building in one year if at that point rent levels make construction feasible. At that time the building will cost $1,000,000 to construct. During the first year after construction would take place, there is a 60 percent chance that NOI will be $150,000 and a 40 percent chance that the NOI will be $75,000. In either case, NOI would be expected to increase at 2 percent per year after the first year. Required: How much should the developer be willing to pay for the land if he wants a 12 percent rate of return?
- A developer plans to start construction of a building in one year if at that point rent levels make construction feasible. At that time the building will cost $1,000,000 to construct. During the first year after construction would take place, there is a 60 percent chance that NOI will be $150,000 and a 40 percent chance that the NOI will be $75,000. In either case, NOI would be expected toincrease at 2 percent per year after the first year. How much should the developer be willing to pay for the land if he wants a 12 percent rate of return?Developers are going to install an airconditioning system in their building and, as a consequence, they believe they can increase rents by $40,000 per month. System A will cost $1,850,000 and monthly maintenance is $4000; system B will cost $1,020,000 and monthly maintenance is $12,000. Using EUAC analysis over 5 years with an interest rate of 18% per year, which alternative should be selected?A company is considering a project that will require an initial investment of 600 and additional investments of 100 and 50 at the end of years one and two, respectively. It is expected that revenue from this project will be 150 per year for five years, beginning one year from the initial investment. Assuming an annual effective rate of 15%, calculate the net present value of this project.
- Consider an investment in which a developer plans to begin construction, of a building that will cost $2,000,000, in two years if, at that point, rent levels make construction feasible. There is a 40 percent chance that NOI will be $200,000 and a 60 percent chance that NOI will be $80,000 one year after the construction. Assuming 10 percent discount rate and an NOI growth rate of 5 percent, what would the land value be at the completion of the construction, under the real options approach?An engineering company needs to decide whether or not to build a new factory. The costs of building the factory are $150 million initially, together with a further $100 million at the end of the next 2 years. Annual operating costs are $5 million commencing at the end of the third year. Annual revenue is predicted to be $50 million commencing at the end of the third year. If the interest rate is 6% compounded annually, fi nd (d) the minimum value of n for which the net present value is positive.A developer plans to start construction of a building in two years if, at that point, rent levels make construction feasible. At that time, the building will cost $1,000,000 to construct. During the first year after construction (year 3), there is a 50% chance that NOI will be $150,000 and a 50% chance that the NOI will be $75,000. In either case, NOI would be expected to increase at 4% per year thereafter. What is the value of the real option on the vacant land today if the relevant discount rate is 14%? O 109,649 O 137,369 O 192,367 96,183
- You are evaluating an investment project costing $42,000 initially. The project will provide $3,000 in after - tax cash flows in the first year, and $7,000 each year thereafter for 10 years. The maximum payback period for your company is 6 years. What is the payback period for this project?An engineering company needs to decide whether or not to build a new factory. The costs of building the factory are $150 million initially, together with a further $100 million at the end of the next 2 years. Annual operating costs are $5 million commencing at the end of the third year. Annual revenue is predicted to be $50 million commencing at the end of the third year. If the interest rate is 6% compounded annually, fi nd (a) the present value of the building costs (b) the present value of the operating costs at the end of n years ( n > 2) (c) the present value of the revenue after n years (n > 2) (d) the minimum value of n for which the net present value is positive.You are assessing the minimum amount of investment that you will be willing to invest today for a billboard construction project. The useful life of the steel structure is 10 years. Monthly advertising space rental costs P120,000. Advertising contracts requires prepayment of the lease before commencing the rental. Rental revenue will be deposited in a deposit account with 2.5% interest rate, compounded quarterly. What is the minimum amount of investment for the billboard steel foundation today?