Optimum Properties Corp. is considering the construction of a 50-unit condominium near theUniversity Belt area. The 15-year investment study shows the following data:DisbursementsRevenueLandP8000 000.00Land, after 15 yrsP43 000 000.00Building25 000 000.00Bldg, after 15 yrs8600 000.00300 000.00Maintenance/yrInsurance & Tax/yrRent/unit-yr120 000.001.2%With an estimated occupancy rate of 92% at all times, validate the acceptability of the project usingthe IRR method. The company applies a 15% MARR on its investments(Ans. Project is acceptable, 15.7%)

The Internal Rate of return: The internal rate of return is the capital budgeting technique used to…

Optimum Properties Corp. is considering the construction of a 50-unit condominium near the University Belt area. The 15-year investment study shows the following data: Disbursements Revenue Land P8000 000.00 Land, after 15 yrs P43 000 000.00 Building 25 000 000.00 Blds, after 15 yrs 8600 000.00 300 000.00 Maintenance/yr Insurance & Tax/ya With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using Rent/unit-yr 120 000.00 1.2% the IRR method. The company applies a 15% MARR on its investments (Ans. Project is acceptable, 15.7%)

Optimum Properties Corp. is considering the construction of a 50-unit condominium near the University Belt area. The 15-year investment study shows the following data: Disbursements Revenue Land P8000 000.00 Land, after 15 yrs P43 000 000.00 Building 25 000 000.00 Blds, after 15 yrs 8600 000.00 300 000.00 Maintenance/yr Insurance & Tax/ya With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using Rent/unit-yr 120 000.00 1.2% the IRR method. The company applies a 15% MARR on its investments (Ans. Project is acceptable, 15.7%)

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Optimum Properties Corp. is considering the construction of a 50-unit condominium near the
University Belt area. The 15-year investment study shows the following data:
Disbursements
Revenue
Land
P8000 000.00
Land, after 15 yrs
P43 000 000.00
Building
25 000 000.00
Bldg, after 15 yrs
8600 000.00
300 000.00
Maintenance/yr
Insurance & Tax/yr
Rent/unit-yr
120 000.00
1.2%
With an estimated occupancy rate of 92% at all times, validate the acceptability of the project using
the IRR method. The company applies a 15% MARR on its investments
(Ans. Project is acceptable, 15.7%)

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