The City of Waltham wants to obtain the value of its 99 year old City Hall property. Your firm has been engaged toprovide an estimate of value. You will use the Cost Approach to determine value. You will be required to estimatereproduction or replacement cost new (specify which is appropriate and why) and proceed through the steps ofthe Cost Approach to complete the task.Cost Estimates (000 omitted): Cost of new construction: $153,000; Since the last renovation 30 years ago, physicaldeterioration: $22,000; functional obsolescence: $6,000; external obsolescence: $2,000; four (4) comparable landvalues have been identified for the valuation estimate: $49,000; $35,000; $40,000; $52,000.Show your answer and the steps of your analysis below:

The Cost ApproachThe cost approach is a method used in real estate appraisal to estimate the value…

Answered: The City of Waltham wants to obtain the…

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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In 1998, Metlock Company completed the construction of a building at a cost of $2,200,000 and first occupied it in January 1999. It was estimated that the building will have a useful life of 40 years and a salvage value of $65,600 at the end of that time. Early in 2009, an addition to the building was constructed at a cost of $550,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $22,000. In 2027, it is determined that the probable life of the building and addition will extend to the end of 2058, or 20 years beyond the original estimate.
The owners of a new planned unit development have installed a package sewage treatment plant that will be paid for by rates charged to the users. package sewage treatment plant cost new = $1,000,000 life of the plant = 240 months %3D salvage value at EOM 240 = 50 O & M cost = gradient in O & M = $400/month/month $40,000/month %3D periodic overhaul every 10 months (first at EOM 4, last at EOM 234) = $100,000/cach gradient in periodic overhaul = $5,000each/10 months number of customers = 6,000 charge per customer = $16.00/month %3D The owners borrowed money at 1 percent per month interest in order to construct the plant, so while they do not expect to make a big profit, they do want the plant to earm a rate of return of at least 1 percent. Is the rate shown above sufficient to carn 1 percent rate of return? (Ans. At a trial i= 1%, the NAW=+$930/month, so the plant earns more than 1% rate of return.)
City Towing is considering the purchase of a new tow truck. The garage currently has no tow truck, and the $100,000 price tag for a new truck would be a major expenditure. The expected useful life is 7 years. The owner of the garage has compiled the following estimates in trying to determine whether the tow truck should be purchased: Purchase of truck $100,000 Salvage value $15,000 Additional net inflows per year $16,000 Repairs required at the end of year 3 $5,000 Minimum required return on investments 12%
Fire company's plant manager is considering whether to buy a new welding robot to replace an old welding robot or overhauling the old welding robot to extend its useful life for 5 more years. The new robot would have a useful life of 5 years. The following information is available: Old welding robot: Original cost- $50,000 Accumulated depreciation- $40,000 Estimated annual operating costs after overhaul- $15,000 Current salvage value- $3,000 Cost of overhaul- $18,000 Salvage value in 10 years- $1,800 New welding robot: Cost- $72,000 Estimated annual operating costs- $8,000 Salvage value at the end of 5 years- $9,000 1. Determine the 5 year cost of overhauling and continuing to use the old robot 2. Determine the 5 year cost of replacing the old robot with the new robot 3. Identify two qualitative aspects management should consider before making their decision.
The City of Houghton bought new municipal sewage equipment in the year 2010. The equipment cost 122,325 dollars and the city spent an additional 19,080 dollars for installation. The sewage equipment was put into service on June 1st, 2010 and the city removed the equipment from service on September 12, 2022. Using the US Straight Line Depreciation Schedule, estimate the total value of depreciation recorded in the accounting books for the years 2010 through 2022 (i.e. calculate the sum of depreciation in each year for years 2010 through 2022). (note: round your answer to the nearest cent and do not include spaces, currency signs, or commas; do not round the recovery factors from the depreciation tables)
I have the answer and question below but I just needf to know how to work it out Solve the problem. Round unit depreciation to nearest cent when making the schedule, and round final results to the nearest cent. A construction company purchased a piece of equipment for $1,710. The expected life is 7,000 hours, after which it will have a salvage value of $280. Find the amount of depreciation for the first year if the piece of equipment was used for 1,600 hours. Use the units-of-production method of depreciation. Answer: ($320)
In 1990, Sunland Company completed the construction of a building at a cost of $880,000 and first occupied it in January 1991. It was estimated that the building would have a useful life of 40 years and a salvage value of $26,000 at the end of that time. Early in 2001, an addition to the building was constructed at a cost of $220,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $9,000. In 2019, it is determined that the probable life of the building and addition will extend to the end of 2050, or 20 years beyond the original estimate. Compute the annual depreciation that would have been charged from 2001 through 2018. Annual depreciation from 2001 through 2018 Compute the annual depreciation to be charged, beginning with 2019. Annual depreciation expense—building
Using the information in the following table , what is the depreciation expense per year created by the project? Dunaway Industries is evaluating the idea of expanding their production facility in Cobb County The CFO gathered the following data. Dunaway Industries spent $ 500,000 researching other sites for their expansion. The equipment needed for the expansion will cost $ 25,600,000 fully installed . The equipment will be depreciated over 20 years to a salvage value of $ 1,000,000 . Dunaway Industries uses straight -line depreciation . If Dunaway accepts the project , the company will sell the equipment for salvage value ( i.e.$ 1,000,000 ) at the end of the life of the project . If Dunaway Industries adds the new equipment , sales are expected to increase by 17,400,000 and costs are expected to increase by $ 10,000,000 . The appropriate tax rate for Dunaway Industries is 30% The capital of the firm includes 70% of equity and 30% of debt . Dunaway Industries recently issued a bond…
A civil engineer who owns his own design/build/operate company purchased a small crane 3 years ago at a cost of $65,000. At that time, it was expected to be used for 10 years and then traded in for its salvage value of $10,000. Due to increased construction activities, the company would prefer to trade for a new, larger crane now, which will cost $80,000. The company estimates that the old crane can be used, if necessary, for another 3 years, at which time it would have a $17,000 estimated market value. Its current market value is estimated to be $29,000, and if it is used for another 3 years, it will have M&O costs (exclusive of operator costs) of $17,000 per year. Determine the values of P, n, S, and AOC that should be used for the existing crane in a replacement analysis. The value of P is $ . The value of n is years. The value of S is $ . The AOC value is $ per year.
In 1990, Sunland Company completed the construction of a building at a cost of $880,000 and first occupied it in January 1991. It was estimated that the building would have a useful life of 40 years and a salvage value of $26,000 at the end of that time. Early in 2001, an addition to the building was constructed at a cost of $220,000. At that time, it was estimated that the remaining life of the building would be, as originally estimated, an additional 30 years, and that the addition would have a life of 30 years and a salvage value of $9,000. In 2019, it is determined that the probable life of the building and addition will extend to the end of 2050, or 20 years beyond the original estimate. Using the straight-line method, compute the annual depreciation that would have been charged each year from 1991 through 2000. Annual depreciation from 1991 through 2000 Compute the annual depreciation that would have been charged from 2001 through 2018. Annual depreciation from…
On January 6, Year 1, Mount Jackson Corporation purchased a tract of land for a factory site for $825,000. An existing building on the site was demolished and the new factory was completed on October 11, Year 1. Additional cost data are shown below: Construction cost of new building $ 1,000,000 Real estate and attorney fees 18,200 Architect fees 84,000 Cost to demolish old building 77,100 Salvage recovery from old building (13,000 ) Which of the following are the capitalized costs of the land and the new building, respectively? Multiple Choice A $843,200 and $1,148,100 B $920,300 and $1,071,000 C $825,000 and $1,166,300 D $907,300 and $1,084,000
The Ajax Specialty Items Corporation has received a 5-year contract to produce a new product. To do the necessary machining operations, the company is considering two alternatives. Alternative A involves continued use of the currently owned lathe. The lathe was purchased 5 years ago for $20,000. Today the lathe is worth $8,000 on the used machinery market. If this lathe is to be used, special attachments must be purchased at a cost of $3,500. At the end of the 5-year contract, the lathe (with attachments) can be sold for $2,000. Operating and maintenance costs will be $7,000/year if the old lathe is used. Alternative B is to sell the currently owned lathe and buy a new lathe at a cost of $25,000. At the end of the 5-year contract, the new lathe will have a salvage value of $13,000. Operating and maintenance costs will be $4,000/year for the new lathe. Using an annual worth analysis, should the firm use the currently owned lathe or buy a new lathe? Base your analysis on a minimum…

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