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Resale va to be in ather a. Using benefit-cost ratio analysis and and 8% MARR, determine which alternative, if any should be selected? b. Compute the IRR for each alternative.

Resale va to be in ather a. Using benefit-cost ratio analysis and and 8% MARR, determine which alternative, if any should be selected? b. Compute the IRR for each alternative.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An investor is considering buying some land for Php5 million and constructing an office building on it. Three buildings are being analysed: 2-storey 5-storey 10-storey 20 M 40 M 105 M Cost of building (excluding cost of land) 10 M 15 M 20 M Resale value* of land & 20 year building after horizon Annual net rental income 3.5 M 5.25 M 12.8 M a. *Resale value to be considered a reduction in cost, rather than a benefit. Using benefit-cost ratio analysis and and 8% MARR, determine which alternative, if any should be selected? b. Compute the IRR for each alternative.
Transcribed Image Text:An investor is considering buying some land for Php5 million and constructing an office building on it. Three buildings are being analysed: 2-storey 5-storey 10-storey 20 M 40 M 105 M Cost of building (excluding cost of land) 10 M 15 M 20 M Resale value* of land & 20 year building after horizon Annual net rental income 3.5 M 5.25 M 12.8 M a. *Resale value to be considered a reduction in cost, rather than a benefit. Using benefit-cost ratio analysis and and 8% MARR, determine which alternative, if any should be selected? b. Compute the IRR for each alternative.
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