Based on the information provided in the case study

Manny Carson, certified management accountant and controller of Wakeman Enterprises, has been given permission to acquire a new computer and software for the company’s accounting system. The capital investment analysis showed an NPV of $100,000. However, the initial estimates of acquisition and installation costs were made on the basis of tentative costs without any formal bids. Manny now has two formal bids, one that would allow the firm to meet or beat the original projected NPV and one that would reduce the projected NPV by $50,000. The second bid involves a system that would increase both the initial cost and the operating cost. Normally, Manny would take the first bid without hesitation. However, Todd Downing, the owner of the firm presenting the second bid, is a close friend. Manny called Todd and explained the situation, offering Todd an opportunity to alter his bid and win the job. Todd thanked Manny and then made a counteroffer. Todd: Listen, Manny, this job at the original…

Suppose that your client, a real estate investor, has asked you to evaluate an anchored retail shopping center that is for sale for $3,595,000 in Clearwater, Florida. You have been asked to perform an analysis of the property, including an estimate of cash flows and IRR, and to make a recommendation on whether or not your client should purchase the property. For this analysis, assume a five-year holding period. The shopping center has 33,250 square feet of rentable space. Since detailed information is not available on existing leases, assume that the property will lease at the average rent for the Tampa / St. Petersburg market. The average asking rent for Tampa is $12.90 and the average vacancy rate is 6.5%. Assume that rents will increase by 5% per year. Annual expenses are as follows: Insurance: $12,312 Utilities: $14,500 RE Taxes: $34,200 Cleaning: $4,500 Landscaping: $9,400 Repairs & Maintenance: $16,500 Miscellaneous: $6,000 These expenses will increase at the same rate as…

Suppose that your client, a real estate investor, has asked you to evaluate an anchored retail shopping center that is for sale for $3,595,000 in Clearwater, Florida. You have been asked to perform an analysis of the property, including an estimate of cash flows and IRR, and to make a recommendation on whether or not your client should purchase the property. For this analysis, assume a five-year holding period. The shopping center has 33,250 square feet of rentable space. Since detailed information is not available on existing leases, assume that the property will lease at the average rent for the Tampa / St. Petersburg market. The average asking rent for Tampa is $12.90 and the average vacancy rate is 6.5%. Assume that rents will increase by 5% per year. Annual expenses are as follows: Insurance: $12,312 Utilities: $14,500 RE Taxes: $34,200 Cleaning: $4,500 Landscaping: $9,400 Repairs & Maintenance: $16,500 Miscellaneous: $6,000 These expenses will increase at the same rate as…

Please I’m confused about this case and question

Marko, Inc., is considering the purchase of ABC Co. Marko believes that ABC Co. can generate cash flows of $5,800, $10,800, and $17,000 over the next three years, respectively. After that time, they feel the business will be worthless. Marko has determined that a rate of return of 12 percent is applicable to this potential purchase. What is Marko willing to pay today to buy ABC Co.?

Answer the given question with a proper explanation and step-by-step solution. Please provide the answer using the math tool otherwise I give the downvote.

Kaimalino Properties (KP) is evaluating six real estate investments. Management plans to buy the properties today and sell them five years from today. The following table summarizes the initial cost and the expected sale price for each property, as well as the appropriate discount rate based on the risk of each venture. (Click on the following icon in order to copy its contents into a spreadsheet.) Project Mountain Ridge Ocean Park Estates Lakeview Seabreeze Green Hills West Ranch Cost Today $3,000,000 15,000,000 9,000,000 6,000,000 3,000,000 9,000,000 Discount Rate 15% 15% 15% 8% 8% 8% Expected Sale Price in Year 5 $18,000,000 75,500,000 50,000,000 35,500,000 10,000,000 46,500,000 KP has a total capital budget of $18,000,000 to invest in properties. a. What is the IRR of each investment? b. What is the NPV of each investment? c. Given its budget of $18,000,000, which properties should KP choose? d. Explain why the profitability index method could not be used if KP's budget were…

An institutional investor is looking in the Miami market to purchase a Class A office building in the downtown area where prevailing cap rates are very compressed. Currently, cap rates are in the 4.0% to 4.5% range for trophy assets, depending on location and other attributes for class A office buildings. Give this information, and given the financials listed below, what should the buyer offer if they hope to submit a competitive bid? Gross revenue = $2,500,000 Other Income = $500,000 Operating expenses = $1,275,000 Offer amount $__- Please give an explanation, thank you!

Use the following information to answer questions 1 to 5. A development corporation purchased land that will be the site of a new luxury condominium complex. Management is considering a six month market research study designed to learn more about potential market acceptance of the condominium project. Management anticipates that, if conducted, the market research study will provide one of the following two results. 1. Favorable report (F): A significant number of the individuals contacted express interest in purchasing a condominium. 2. Unfavorable report (U): Very few of the individuals contacted express interest in purchasing a condo- minium. After deciding whether to conduct the market research study, they have the following two decision alternatives. d1 = a small complex with 30 condominiumsd2 = a medium complex with 60 condominiumsFollowing this, a chance event concerning the demand for the condominiums has two states of nature. s1 = strong demand for the condominiumss2 = weak…

Use the following information to answer questions 1 to 5. A development corporation purchased land that will be the site of a new luxury condominium complex. Management is considering a six month market research study designed to learn more about potential market acceptance of the condominium project. Management anticipates that, if conducted, the market research study will provide one of the following two results. 1. Favorable report (F): A significant number of the individuals contacted express interest in purchasing a condominium. 2. Unfavorable report (U): Very few of the individuals contacted express interest in purchasing a condo- minium. After deciding whether to conduct the market research study, they have the following two decision alternatives. d1 = a small complex with 30 condominiumsd2 = a medium complex with 60 condominiumsFollowing this, a chance event concerning the demand for the condominiums has two states of nature. s1 = strong demand for the condominiumss2 = weak…

O Δ You work for a construction company that is considering a bid on a project to modernize the power grid in a country that is recovering from an earthquake. The cost to prepare the documentation that is necessary to submit the bid is $50,000. If a bid is submitted, you estimate that the project will be awarded with probability 0.5. The company's profit depends on the political situation prevalent in the country at the time of the project. Based on your experience, you conclude that with probability 0.2, the country would present favorable conditions and that the company would earn $240,000; with probability 0.7, the country would present stable conditions and the company would earn $140,000; and that with probability 0.1, the country would present unstable conditions and the company would lose 560,000. a. Would you recommend that the company bid on the project? b. Before your company bids on the project, what is the maximum amount you would pay for a forecast of the political…

The investor-developer would not be comfortable with a 7.8 percent return on cost because the margin for error is too risky. If construction costs are higher or rents are lower than anticipated, the project may not be feasible. The asking price of the project is $12,700,000 and the construction cost per unit is $82,200. The current rent to justify the land acqusition is $2.2 per square foot. The weighted average is 900 square feet per unit. Average vacancy and Operating expenses are 5% and 35% of Gross Revenue respectively. Use the following data to rework the calculations in Concept Box 16.2 in order to assess the feasibility of the project:   Required: a. Based on the fact that the project appears to have 9,360 square feet of surface area in excess of zoning requirements, the developer could make an argument to the planning department for an additional 10 units, 250 units in total, or 25 units per acre. What is the percentage return on total cost under the revised proposal? Is the…

Mr. Anderson is a trainee on the capital acquisition staff of a major manufacturer. In the process of evaluating several capital acquisition, he determines that one of the projects has two IRRs. He checked his calculations several times but did not find any error. He is puzzled by this finding. Explain to Mr. Anderson why more than one IRR is possible for a capital project

The investor-developer would not be comfortable with a 7.8 percent return on cost because the margin for error is too risky. If construction costs are higher or rents are lower than anticipated, the project may not be feasible. The asking price of the project is $4,600,000 and the construction cost per unit is $80,400. The current rent to justify the land acqusition is $1.3 per square foot. The weighted average is 900 square feet per unit. Average vacancy and Operating expenses are 5% and 35% of Gross Revenue respectively. Use the following data to rework the calculations in Concept Box 16.2 9(please see screen shots attached to question) in order to assess the feasibility of the project:   Required: a. Based on the fact that the project appears to have 9,360 square feet of surface area in excess of zoning requirements, the developer could make an argument to the planning department for an additional 10 units, 250 units in total, or 25 units per acre. What is the percentage return on…

The investor-developer would not be comfortable with a 7.8 percent return on cost because the margin for error is too risky. If construction costs are higher or rents are lower than anticipated, the project may not be feasible. The asking price of the project is $4,600,000 and the construction cost per unit is $80,400. The current rent to justify the land acqusition is $1.3 per square foot. The weighted average is 900 square feet per unit. Average vacancy and Operating expenses are 5% and 35% of Gross Revenue respectively.  Based on the fact that the project appears to have 9,360 square feet of surface area in excess of zoning requirements, the developer could make an argument to the planning department for an additional 10 units, 250 units in total, or 25 units per acre. What is the percentage return on total cost under the revised proposal? Is the revised proposal financially feasible? What is the Return on total cost under the revised proposal? Additional information below: Physical…

The investor-developer would not be comfortable with a 7.8 percent return on cost because the margin for error is too risky. If construction costs are higher or rents are lower than anticipated, the project may not be feasible. The asking price of the project is $4,600,000 and the construction cost per unit is $80,400. The current rent to justify the land acqusition is $1.3 per square foot. The weighted average is 900 square feet per unit. Average vacancy and Operating expenses are 5% and 35% of Gross Revenue respectively. Based on the fact that the project appears to have 9,360 square feet of surface area in excess of zoning requirements, the developer could make an argument to the planning department for an additional 10 units, 250 units in total, or 25 units per acre. What is the percentage return on total cost under the revised proposal?

You have an opportunity to acquire a property from First Capital Bank. The bank recently obtained the property from a borrower who defaulted on his loan. First Capital is offering the property for $200,000. If you buy the property, you believe that you will have to spend (1) $10,500 on various acquisition related expenses and (2) an average of $2,000 per month during the next 12 months for repair costs, and so on, in order to prepare it for sale. Because First Capital Bank would like to sell the property as soon as possible, it is willing to provide $180,000 in financing at 4.25 percent interest for 12 months payable monthly (interest only). Your market research indicates that after you repair the property, it may sell for about $225,000 at the end of one year. Furthermore, you will probably have to pay about $3,000 in fees and selling expenses in order to sell the property at that time.   If you wanted to earn a 20 percent return compounded monthly, do you believe that this would be a…

I NEED HELP ASAP! I NEED BOTH REQUIRMENT A AND B!

Use the information below to answer the following question:   The owner of the Krusty Krab is considering selling his restaurant and retiring.   An investor has offered to buy the Krusty Krab for $350,000 whenever the owner is ready for retirement.  The owner is considering the following three alternatives:   Sell the restaurant now and retire.   Hire someone to manage the restaurant for the next year and retire. This will require the owner to spend $50,000 now, but will generate $100,000 in profit next year. In one year the owner will sell the restaurant.   Scale back the restaurant's hours and ease into retirement over the next year. This will require the owner to spend $40,000 on expenses now, but will generate $75,000 in profit at the end of the year. In one year the owner will sell the restaurant.   If the interest rate is 7%, compare the alternatives.

Lenny, a real estate professional, has found a retail outparcel for sale for $5,000,000 for a client he is representing. Lenny's analysis suggests the property will be worth $7,000,000 in 2 years after the site's land use is reclassified to allow for a mixed use development. Before the client is willing to make an offer, she wants to know what the annual return will be. What is the annual rate of return on this investment? A) 18.32% B) 40% C) 6.13% D) 11.87%

Adidas is evaluating a proposal for a new product. If they launch the​ product, they will use an existing facility in the production​ process, which they previously acquired for $4 million. They currently lease it to a third​ party, and they expect to continue to do so if they​ don't use it for the new product. They rent it out for $102,000 and they expect that to remain flat for the foreseeable future. The project requires immediate investment in CAPX of $1.3 ​million, which will be depreciated on a​ straight-line basis over the next 10 years for tax purposes. The project will end after eight​ years, at which time they expect to salvage some of the initital CAPX and sell it for $469,000. The project requires immediate working capital investments equal to​ 10% of predicted​ first-year sales. After​ that, working capital will remain at​ 10% of the following​ year's expected sales. They expect sales to be $4.6 million in the first year and to stay constant for eight years. Total…

What is the bid price for the following situation: You have been approached by a client interested in buying 130,000 widgets a year from you for 5 years and has asked you to submit a bid for his consideration. To be able to produce these widgets, you need to invest in $830,000 in equipment. The equipment has a taxable life of 10 years and will be depreciated using straight line. At the end of the 5 years, the equipment can be sold for $60,000 (market or scrap value). The variable cost of producing the widgets is $8 per unit and you will incur in a fixed cost of $210,000 a year. You have estimated you will need $70,000 today in working capital. The appropriate discounting rate for this type of projects is 14%. The corporate tax rate applicable to you in this case is 30%. What is the minimum price you would charge for each widget (bid price to be given by you to the client)?

A developer owns a vacant site for which he recently paid $1,000,000. He intends to develop a 15,000 sq. ft. building which will cost a total of $110 per sq. ft. to build (hard and soft costs excluding land). What will the value of the property have to be (rounded to the nearest $10,000) once it is completed and leased if the developer's investors require an 8.0% return O $2,740,000 O $2,510,000 O $2,860,000 O $3,190,000

what is the sale price?

Scenario:Suppose that your client, a real estate investor, has asked you to evaluate an anchored retail shopping center that is for sale for $3,595,000 in Clearwater, Florida. You have been asked to perform an analysis of the property, including an estimate of cash flows and IRR, and to make a recommendation on whether or not your client should purchase the property. For this analysis, assume a five-year holding period. The shopping center has 33,250 square feet of rentable space. Since detailed information is not available on existing leases, assume that the property will lease at the average rent for the Tampa/St. Petersburg market. The average asking rent for Tampa is $12.90, and the average vacancy rate is 6.5%. Assume that rents will increase by 5% per year. Annual expenses are as follows: Insurance: $12,312 Utilities: $14,500 Real Estate Taxes: $34,200 Cleaning: $4,500 Landscaping: $9,400 Repairs & Maintenance: $16,500 Miscellaneous: $6,000 These expenses will increase at…