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 P8 000 000.00 Land, after 15 yers P43 000 000.00 Building 25 000 000.00 Bldg, after 15 yers 8 600 000.00 Maintenance/yr 300 000.00 Rent/unit-yr 120 000.00 Insurance & Realty Tax/yr 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.
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 P8 000 000.00 Land, after 15 yers P43 000 000.00 Building 25 000 000.00 Bldg, after 15 yers 8 600 000.00 Maintenance/yr 300 000.00 Rent/unit-yr 120 000.00 Insurance & Realty Tax/yr 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.
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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- 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 |
P8 000 000.00 |
Land, after 15 yers |
P43 000 000.00 |
|
Building |
25 000 000.00 |
Bldg, after 15 yers |
8 600 000.00 |
|
Maintenance/yr |
300 000.00 |
Rent/unit-yr |
120 000.00 |
|
Insurance & Realty Tax/yr |
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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