The market value of the property that you own is $15 million. The gross annual rental income for this property is $600,000. The ta is 28%. The set up costs (renovations ect) in order to use the building and land for your own business operations are $7,000,000 annual revenue if you were to use the building for your own business operations with low demand would be $5 million and have 30% chance of occuring. The annual revenue if you were to use the building for your own business operations with medium dema would be $9 million and have a 40% chance of occuring. he annual revenue if you were to use the building for your own business operations with high demand would be $13 million. The variable costs (% of revenue) is 65 %. The fixed costs are $2.5 million. Th costs of capital is 10% and the risk free rate is 3 % . he initial cost for setting up the expansion of business can be fully depreciate over 10 years using the straight-line method. The value of land will be preserved at its current market value, but may not be depreciated for tax reasons. Draw up a summary of the logistic business's annual net operating cash flow.
The market value of the property that you own is $15 million. The gross annual rental income for this property is $600,000. The ta is 28%. The set up costs (renovations ect) in order to use the building and land for your own business operations are $7,000,000 annual revenue if you were to use the building for your own business operations with low demand would be $5 million and have 30% chance of occuring. The annual revenue if you were to use the building for your own business operations with medium dema would be $9 million and have a 40% chance of occuring. he annual revenue if you were to use the building for your own business operations with high demand would be $13 million. The variable costs (% of revenue) is 65 %. The fixed costs are $2.5 million. Th costs of capital is 10% and the risk free rate is 3 % . he initial cost for setting up the expansion of business can be fully depreciate over 10 years using the straight-line method. The value of land will be preserved at its current market value, but may not be depreciated for tax reasons. Draw up a summary of the logistic business's annual net operating cash flow.
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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Transcribed Image Text:The market value of the property that you own is $15 million. The gross annual rental income for this property is $600,000. The tax rate
is 28% . The set up costs (renovations ect) in order to use the building and land for your own business operations are $7,000,000. The
annual revenue if you were to use the building forr your own business operations with low demand would be $5 million and have a
30% chance of occuring. The annual revenue if you were to use the building for your own business operations with medium demand
would be $9 million and have a 40% chance of occuring. he annual revenue if you were to use the building for your own business
operations with high demand would be $13 million. The variable costs (% of revenue) is 65 %. The fixed costs are $2.5 million. The
costs of capital is 10% and the risk free rate is 3%. he initial cost for setting up the expansion of business can be fully depreciated
over 10 years using the straight-line method. The value of land will be preserved at its current market value, but may not be
depreciated for tax reasons. Draw up a summary of the logistic business's annual net operating cash flow.
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