Business, 30.03.2021 21:00 camperangie3364

Assume you are helping Claire and are trying to determine if the Rockford shopping mall is a good investment of your $12.5 million inheritance, using a 20-year period. Assume operation of the facility begins in year 2 and the equity is utilized in year 1. The 20-year periods STARTS the first year of operation of the facility. Your friend estimates the 400,000 square foot mall will generate $35.65 per square foot. Maintenance and operating costs will be 4% of the total project cost, given in the table below. Assume the facility will begin to operate in year 2, and the equity is used in year 1. Description Estimated Cost (S)
Land 3,875,000
Bob Builder consulting fee 200,000
Corny Cornell consulting fee 180,000
Architect fee 740,000
Permitting cost 505,000
Design & consulting engineer fee 620,000
Grading and site work sub 3,659,000
Construction of shopping facility 4,750,000
Construction of parking lot 4,750,000
Installation of utilities by sub 3,050,000
Installation of electrical reticulation by sub 627,000
Landscaping sub 627,000
Allowance for fees of loans and interests 795,000
Total 94,596,000

Determine the:

a. Gross annual revenue
b. Annual maintenance costs
c. Net annual revenue
d. Estimated annual debt service
e. Estimated annual profit
f. Net present value, if the discount rate is 12.75%
g. Internal rate of return for the investment

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