8-33 The owner of a downtown parking lot has employed a civil engineering consulting firm to advise him on the economic feasibility of constructing an office building on the site. Betty Samuels, a newly hired civil engineer, has been assigned to make the anal- ysis. She has assembled the following data: Total Net Annual Total Investment Revenue $ 0 22,000 60,000 72,000 100,000 105,000 120,000 Alternative 0 $ Sell parking lot Keep parking lot Build 1-story building Build 2-story building Build 3-story building Build 4-story building Build 5-story building 1,000,000 $ 200,000 400,000 555,000 750,000 875,000 *Includes the value of the land. The analysis period is to be 15 years. For all alternatives, the property has an estimated resale (salvage) value at the end of 15 years equal to the present total investment. (a) Construct a choice table for interest rates from 0% to 100%.
8-33 The owner of a downtown parking lot has employed a civil engineering consulting firm to advise him on the economic feasibility of constructing an office building on the site. Betty Samuels, a newly hired civil engineer, has been assigned to make the anal- ysis. She has assembled the following data: Total Net Annual Total Investment Revenue $ 0 22,000 60,000 72,000 100,000 105,000 120,000 Alternative 0 $ Sell parking lot Keep parking lot Build 1-story building Build 2-story building Build 3-story building Build 4-story building Build 5-story building 1,000,000 $ 200,000 400,000 555,000 750,000 875,000 *Includes the value of the land. The analysis period is to be 15 years. For all alternatives, the property has an estimated resale (salvage) value at the end of 15 years equal to the present total investment. (a) Construct a choice table for interest rates from 0% to 100%.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:8-33 The owner of a downtown parking lot has employed
a civil engineering consulting firm to advise him on
the economic feasibility of constructing an office
building on the site. Betty Samuels, a newly hired
civil engineer, has been assigned to make the anal-
ysis. She has assembled the following data:
Total
Net Annual
Revenue
Total
Alternative
Investment
Sell parking lot
Keep parking lot
Build 1-story building
Build 2-story building
Build 3-story building
Build 4-story building
Build 5-story building 1,000,000
$
200,000
400,000
555,000
22,000
60,000
72,000
100,000
105,000
750,000
875,000
120,000
*Includes the value of the land.
The analysis period is to be 15 years. For all
alternatives, the property has an estimated resale
(salvage) value at the end of 15 years equal to the
present total investment.
(a) Construct a choice table for interest rates from
0% to 100%.
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