Template-Assignment 2-Week8

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University of Technology Sydney *

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48250

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Finance

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Apr 3, 2024

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Group Number: Student ID- Name 13197140 - Dean Thill 24866600 - Chenfeng Ma 24866586 - Ruihan Gao 24901872 - Mutian Shangguan 24901819 - Botu Li
Allocated task for data collection
Topic of the project Allocated task for calculation or settin the CBA and assumption tables Calculate and explain Financial Evaluation.
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This sheet is about your project Title of the project Project Description Alternative A
Alternative B
The Harbourside Shopping Centre Item run by the Mirvac group. Mirvac Group plans to conduct a comprehensive renovation of the seaside shop commercial success. The shopping center is located in the coastal area, and its age. However, compared to complete redevelopment, Mirvac Group believes tha more cost-effective approach. Recent comments have pointed out that the curre considered a "tired travel trap", and has "passed its lifespan". This means that s themselves to meet the needs of modern consumers. In order to achieve this go following plan: Modern facilities: The shopping center will undergo a comprehensive facility upg decoration of the store, improving the comfort of the shopping environment, an navigation systems. This will provide customers with a more enjoyable shopping Solar panels: In order to reduce operating costs and reduce environmental impa panels on the roof of shopping centers. This will help provide green energy, redu provide sustainability for shopping centers. Business strategy reshaping: Mirvac Group will reassess the business strategy o merchants and brands to attract a wider customer base. They will also seek to p dining experiences to make the shopping center a hub for social and cultural ac Improving sustainability: In addition to solar panels, shopping centers will also a such as waste management and water-saving schemes, to reduce environmenta Through these measures, Mirvac Group hopes to improve the image of shopping attractiveness, maintain the value of their investment portfolio, and ensure that the future. This plan not only focuses on business success, but also on sustainab
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Mirvac Group plans to conduct a comprehensive reconstruction of the seaside s residential and commercial office project. Based on feedback from week five, we to redevelop this location but develop it into an office/residential space. The pro rebuild the site into a low to mid level building and provide independent office/r location of the seaside shopping center is considered a highly advantageous loc situation include its seaside location, proximity to multiple transportation hubs ( and location very close to the Central Business District. Considering the decline development towards online shopping, Mirvac's investment in redeveloping this future seems pointless. Redeveloping it as a dedicated residential space or rent meaningful (already included in the plan). This will provide greater flexibility for plan includes the following aspects: Residential space: The shopping center will be redesigned as a low to mid story units. These units will benefit from their unique geographical location, enjoying convenient transportation connections. Commercial office space: Some shopping centers will be converted into modern growing business needs. These spaces will attract companies to seek highly acc locations. Flexibility and Sustainability: Mirvac will ensure that the project has flexibility to on sustainability, adopting green buildings and energy-saving measures to redu By transforming shopping centers into residential and commercial office project advantageous geographical location, diversify its investment portfolio, and ensu changing business environment. This plan emphasizes Mirvac's strategic vision
This sheet is about assumptions that you wil The following template is an indicative one, and it can be Assumptions- Alternative A Values Capital Cost $137,092,307.69 Operating cost $20 million - $35 million annually Maintanace cost $20 million - $35 million annually Benefits $35.6million - $56.7million per year Salvage value $79,357,259.69 Discount rate 5.47%
Project life 75 Values Capital Cost $2 billion Operating cost $20 million - $40 million annually Maintanace cost $20 million - $40 million annually Assumptions- Alternative B
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Benefits Salvage value Discount rate 8% Project life 50years $62.22 million to $82.72 million annually $400 million (This is a very rough estimate as property values could appreciate).
ll use for the CBA analysis (P e modified as needed What elements are included in this calculation Land acquisition costs.This includes the cost of purchasing and clearing existing land, as well as potential land taxes and license fees that may need to be paid.Building development costs. This includes the construction costs of buildings, infrastructure, and public spaces, including design, construction, decoration, and equipment.Financing costs.including loan interest, financing fees, loan handling fees, etc. The various taxes and wages required for the operation of shopping centers include a series of infrastructure costs such as water, electricity and gas required for construction. Maintenance costs include fixed annual payments for utilities and gas. There is also the maintenance cost of the annual renovation of the mall's equipment. Annual maintenance costs, operating costs, and all revenue for that year All the capital invested in the initial phase of the project, the capital that the project needs to consume each year after the initial investment. The annual fixed cost plus all the debt. And all income plus current assets each year.
The life of the building materials, the service life and the local land environment limit the size of the shopping mall. What elements are included in this calculation The text mentions a "$2 billion revitalization project" for the Harbourside mixed-use precinct. This could be considered the overall capital cost for the project. utilities, salaries of employees, security, cleaning, landscaping, and other day-to-day operations of the precinct refurbishment, equipment replacements, and infrastructure upkeep
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1. Commercial Space(Assuming a rental rate for premium commercial space in Sydney (based on previous years' data until 2022), the price could be around AUD $800 to $1,200 per square meter annually) 2.Residential Space(265 luxury apartments, assuming we can sell 50 units in the first year,and we assume each apartment is sold for an average of AUD $2 million (a conservative estimate for luxury apartments in Sydney's prime locations).3.Retail Space(assuming a rental rate of AUD $1,000 to $1,500 per square meter annually). 4.Public Domain Funding and Art Activation 5.Public Open Spaces this is a large real estate development, its value might appreciate over time rather than depreciate In real estate, a typical discount rate might range from 6-12%. However, given this is a significant urban project with government involvement, let's assume a modest discount rate. The project life might be based on the expected lifespan of the buildings and infrastructure. Large-scale mixed-use developments are often designed to last several decades.
Provide the detail) for both Alternatives Source of dataset https://www.urban.com.au/news/nsw/harboursi https://www.urban.com.au/news/nsw/ harbourside-shopping-centre-in-darling-harbour- listed-for-250m-plus P.s.https://www.ipcn.nsw.gov.au/cases/2021/04/ harbourside-shopping-centre--darling-harbour & https://www.planningportal.nsw.gov.au/major- projects/projects/harbourside-shopping-centre- redevelopment https://www.urban.com.au/news/nsw/harboursi https://www.urban.com.au/news/nsw/harboursi P.s.https://www.ipcn.nsw.gov.au/cases/ 2021/04/harbourside-shopping-centre-- darling-harbour & https://www.planningportal.nsw.gov.au/major- projects/projects/harbourside-shopping- centre-redevelopment
Source of dataset P.s.https://www.ipcn.nsw.gov.au/cases/ 2021/04/harbourside-shopping-centre-- darling-harbour & https://www.planningportal.nsw.gov.au/major- projects/projects/harbourside-shopping- centre-redevelopment https://www.mirvac.com/en/about/news-and-m These details haven't been provided, but we can make a rough assumption. For a large- scale mixed-use precinct, annual operating costs could be in the ballpark of 1-3% of the capital cost. Also no details ,assuming 1-2% of the capital cost annually might be reasonable.
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REA Group (realestate.com.au) JLL Australia (jll.com.au) CBRE Australia (cbre.com.au) Reserve Bank of Australia (rba.gov.au) https://www.investopedia.com/terms/s/salvage https://www.investopedia.com/ https://www.wbdg.org/resources/life-cycle-asse
This sheet is about the cash-flow a CBA- Ailternative A Year Income statement +Revenue -manufacturing and O&M cost -Depreciation -Debt interest Taxable income -Income tax Net income Cash flow statement Operating activities +Net income +Depreciation Investing activities -Capital investment +Salvage value -Gains tax +Losses (on Depreciable Assets) -investment in working Capital Working capital recovery Financing activities +Borrowed Funds -Repayment of principal Net cash flow Financial Evaluation PB NPV BCR
CBA- Ailternative B Year Income statement +Revenue -manufacturing and O&M cost -Depreciation -Debt interest Taxable income -Income tax Net income Cash flow statement Operating activities +Net income +Depreciation Investing activities -Capital investment +Salvage value -Gains tax +Losses (on Depreciable Assets) -investment in working Capital Working capital recovery Financing activities +Borrowed Funds -Repayment of principal Net cash flow Financial Evaluation PB NPV BCR
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and the calculation of the financial indicators for both A method of calculation $Manufacturing\ and\ O&M\ Cost$ $Depreciation = \frac{Capital\ Cost}{Project\ Life}$ $Debt\ Interest = Capital\ Cost \times Discount\ Rate$ $Taxable\ Income = Revenue - (Manufacturing\ and\ O&M\ Cost + Depreciation + Debt\ Intere $Income\ Tax = Taxable\ Income \times Tax\ Rate$ $Net\ Income = Taxable\ Income - Income\ Tax$ Obtained from Income Statement $Capital\ Investment = Capital\ Cost$ $Salvage\ Value$ $Gains\ Tax = \frac{(Capital\ Investment - Salvage\ Value)}{Project\ Life}$ $Losses = Depreciation$ Annual capital recovery amount=(investment cost residual value)/project life Assuming that 10% of the borrowed funds need to be repaid annually as principal repayment Values 0.3432 $78,471,460.53 $1.23
method of calculation $Manufacturing\ and\ O&M\ Cost$ $Depreciation = \frac{Capital\ Cost}{Project\ Life}$ $Debt\ Interest = Capital\ Cost \times Discount\ Rate$ $Taxable\ Income = Revenue - (Manufacturing\ and\ O&M\ Cost + Depreciation + Debt\ Intere $Income\ Tax = Taxable\ Income \times Tax\ Rate$ $Net\ Income = Taxable\ Income - Income\ Tax$ $Capital\ Investment = Capital\ Cost$ $Salvage\ Value$ $Manufacturing\ and\ O&M\ Cost$ $Depreciation = \frac{Capital\ Cost}{Project\ Life}$ $Debt\ Interest = Capital\ Cost \times Discount\ Rate$ $Taxable\ Income = Revenue - (Manufacturing\ and\ O&M\ Cost + Depreciation + Debt\ Intere Values 0.0045 $15,102,469.62 2.4167 The operating cost involves the cost from the beginning of reconstruction to operation, which includes the pre-sale of buildings before completion. The specific operating costs are determined by the subsequent owners.
ternatives 1 2 $35.6 million $46.15 million $20 million $27.5 million $1,827,899.44 $1,827,899.44 $7,504,156.54 $7,504,156.54 $63,869.79 $3,112,869.79 $19,160.94 $933,860.937. $44,708.85 $44,708.85 $44,708.85 $44,708.85 $1,827,899.44 $1,827,899.44 $137,092,308 $137,092,308 $79,357,260 $79,357,260 $23,258,808.68 $23,258,808.68 $1,827,897.43 $1,827,897.43 $6,854,615 $8,225,538 $579,167.46 $579,167.46 $1,280,538.20 $1,370,923.08 $128,053.82 &137,092.31 $28,585,186.58 $25,637,511.34 Interpretation of results PB value is used to measure the profitability of a project. If PB i NPV is an important indicator for evaluating whether a project's BCR is used to evaluate the relationship between the benefits a
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$62.22 million $72.47 million $20 million $30 million $40 million $40 million $13709.230.77 $13,709,231 $8,509,769.23 $11,239,230.77 $3,596,769.23 $1,886,769.23 $8,392,461.54 $4,402,461.54 $8,392,461.54 $4,402,461.54 $40 million $40 million $2 billion $2 billion $400 million $400 million $62.23 million $72.48 million $20 million $30 million $40,000,000.00 $40,000,000.00 $7,504,156.54 $7,504,156.54 $5,284,156.54 $5,034,156.54 Interpretation of results PB value is used to measure the profitability of a project. If PB i NPV is an important indicator for evaluating whether a project's BCR is used to evaluate the relationship between the benefits a
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3 $35.7 million $21 million $1,827,900.44 $7,504,156.54 $837,130.21 $251,139.06 $44,708.85 $44,708.85 $1,827,899.44 $137,092,308 $79,357,260 $23,258,808.68 $1,827,897.43 $9.596,461.49 $579,167.46 $1,462,318 $146,232 $24,248,762.61 is greater than 1, the project is considered to have economic benefits because a posi s investment is worth it. If the NPV is positive, the project is financially profitable; if th and costs of a project. If the BCR is greater than 1, the total return of the project is gr
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$82.72 million $40 million $40 million $13.709.230.77 $11,989,230.77 $3,596,769.23 $8,392,461.54 $8,392,461.54 $40 million $2 billion $400 million $82.73 million $40 million $40,000,000.00 $7,504,157 $4,784,156.54 is greater than 1, the project is considered to have economic benefits because a posi s investment is worth it. If the NPV is positive, the project is financially profitable; if th and costs of a project. If the BCR is greater than 1, the total return of the project is gr
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itive NPV indicates a positive net present value of the project. If PB is less than 1, the he NPV is negative, the project may not have profitability. A higher NPV usually indic reater than the total cost, which is usually considered a good investment. If the BCR
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itive NPV indicates a positive net present value of the project. If PB is less than 1, the he NPV is negative, the project may not have profitability. A higher NPV usually indic reater than the total cost, which is usually considered a good investment. If the BCR
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e project may not have sufficient profitability, indicating that the net present value o cates a more attractive investment. is less than 1, the project may not be worth investing because the total cost is grea
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e project may not have sufficient profitability, indicating that the net present value o cates a more attractive investment. is less than 1, the project may not be worth investing because the total cost is grea
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of the project is negative. ater than the total revenue.
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of the project is negative. ater than the total revenue.
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