A commercial building design cost $91/square-foot to construct eight years ago (for an 77,000-square-foot building). This construction cost has increased 5.5% per year since then. Presently, your company is considering construction of a 130,000-square-foot building of the same design. The cost capacity factor is X = 0.91. In addition, it is estimated that working capital will be 4% of construction costs, and that project management, engineering services, and overhead will be 4.2%, 8%, and 30%, respectively, of construction costs. Also, it is estimated that annual expenses in the first year of operation will be $6/square foot, and these are estimated to increase 5.67% per year thereafter. The future general inflation rate is estimated to be 6.69% per year, and the market-based MARR = 12% per year (im). Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. a. What is the estimated capital investment for the 130,000-square-foot building? The estimated capital investment is $ 25.32 million. (Round to two decimal places.) b. Based on a before-tax analysis, what is the PW for the first 10 years of ownership of the building? More Info PW=$ million (Round to two decimal places.) 因
A commercial building design cost $91/square-foot to construct eight years ago (for an 77,000-square-foot building). This construction cost has increased 5.5% per year since then. Presently, your company is considering construction of a 130,000-square-foot building of the same design. The cost capacity factor is X = 0.91. In addition, it is estimated that working capital will be 4% of construction costs, and that project management, engineering services, and overhead will be 4.2%, 8%, and 30%, respectively, of construction costs. Also, it is estimated that annual expenses in the first year of operation will be $6/square foot, and these are estimated to increase 5.67% per year thereafter. The future general inflation rate is estimated to be 6.69% per year, and the market-based MARR = 12% per year (im). Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. a. What is the estimated capital investment for the 130,000-square-foot building? The estimated capital investment is $ 25.32 million. (Round to two decimal places.) b. Based on a before-tax analysis, what is the PW for the first 10 years of ownership of the building? More Info PW=$ million (Round to two decimal places.) 因
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:A commercial building design cost $91/square-foot to construct eight years ago (for an 77,000-square-foot building). This construction cost has increased 5.5% per
year since then. Presently, your company is considering construction of a 130,000-square-foot building of the same design. The cost capacity factor is X = 0.91. In
addition, it is estimated that working capital will be 4% of construction costs, and that project management, engineering services, and overhead will be 4.2%, 8%, and
30%, respectively, of construction costs. Also, it is estimated that annual expenses in the first year of operation will be $6/square foot, and these are estimated to
increase 5.67% per year thereafter. The future general inflation rate is estimated to be 6.69% per year, and the market-based MARR = 12% per year (im).
Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year.
a. What is the estimated capital investment for the 130,000-square-foot building?
The estimated capital investment is $25.32 million. (Round to two decimal places.)
b. Based on a before-tax analysis, what is the PW for the first 10 years of ownership of the building?
More Info
PW=$ million (Round to two decimal places.)
Enter your answer in the answer box, then click Check Answ
1 part remaining
N
1
2
4
5
6
7
8
9
10
Worth
Factor
Single Payment
Compound Present
Amount
Factor
To Find F
Given P
F/P
1.1200
1.2544
1.4049
1.5735
1.7623
1.9738
Discrete Compounding; i = 12%
2.2107
2.4760
2.7731
3.1058
To Find P
Given F
P/F
0.8929
0.7972
0.7118
0.6355
0.5674
0.5066
0.4523
0.4039
0.3606
0.3220
Compound
Amount
Factor
To Find F
Given A
F/A
1.0000
2.1200
4.7793
6.3528
8.1152
10.0890
12.2997
14.7757
17.5487
Uniform Series
Present Sinking
Worth
Factor
To Find P
Given A
P/A
Fund
Factor
To Find A
Given F
A/F
1.0000
0.4717
.2963
0.2092
0.1574
0.1232
0.8929
1.6901
2.4018
3.0373
3.6048
4.1114
4.5638
4.9676
5.3282
5.6502
0.0991
0.0813
0.0677
0.0570
OX
Capital
Recovery
Factor
To Find A
Given P
A/P
1.1200
0.5917
0.4163
0.3292
0.2774
0.2432
0.2191
0.2013
0.1877
0.1770
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