Questions are about Finance. Part C1 of 3Department of Transportation has entered into a lease with Japan International Cooperation Agency toundertake a redevelopment of the Metro Manila Subway, including the building of new retail premises,offices, and private stations. It assembled the site using its powers of compulsory purchase and has letthe land to JICA for 120 years at a rent of 1,600,000 per annum. The yield expected from this type ofinvestment is 25 per cent. What is the value of Department of Transportation's investment in this lease?Part C 2 of 3JICA has let a shop in the subway redevelopment scheme to Ayala Malls a commercial retailer, for 12 yearsat a rent of 240,000 per year. The yield on prime retail property of this sort in the subway station is 5.5per cent. What is the value of this lease?Part C 3 of 3JICA has secured an important concession from Department of Transportation in which it will not pay thefull rent of 1,600,000 per annum until year 5 of the project but will pay a reduced rent of 300,000 per yearfor the first 4 years. This is to allow for JICA not being able to let all theproperties during the construction phase of the project. What is now the value of Department ofTransportation's investment in the lease?Part D 1 of 2An investment of 7,500,000 is expected to produce the following cash flows including decommissioningcosts in year 6,Year CashflowO (7,500,000)11,750,0002 2,250,0003 2,750.0004 2,750,00051.650.0006 (1,250,000)Calculate the Net Present Value of the investment at a target rate of 7.5%. Explain whether the investmentis viable at this discount rate.Part D 2 of 2Using the same NPV Data (Part D 1 of 1)By how much could the cost of the project increase and the project still remain viable at a discount rateof 7.5%?

Hi, Thanks for the Question. Since you asked multiple questions, we will answer first question for…

Part C1 of 3 Department of Transportation has entered into a lease with Japan International Cooperation Agency to undertake a redevelopment of the Metro Manila Subway, including the building of new retail premises, offices, and private stations. It assembled the site using its powers of compulsory purchase and has let the land to JICA for 120 years at a rent of 1,600,000 per annum. The yield expected from this type of investment is 25 per cent. What is the value of Department of Transportation's investment in this lease?