Calculate the cumulative cash flows, Cost Accounting

Assume that you are the purchaser of the building at the end of the construction period, and you have paid the developer an amount which gives you a 7% annual return on net revenue generated by the building in its first year of occupancy.   

You do not pay tax, and you have paid for the building from your cash reserves - i.e. you are not borrowing money, nor are you charging yourself interest.  

Assume:  

(a) Gross rentals are reviewed every two years, and are increased by an amount relating to a CPI increase of 4% per annum.

(b) Outgoings increase annually by 5% per annum.  

(c) You make no further investment in the building.  

(d)  You calculate the building to command a 6.5% annual return to a buyer when it is sold at the end of the tenth year of operation.  

Calculate (over a 10 year period of ownership)  

1. Annual net cash flows.  

2. Cumulative cash flows.  

3. Net present value of the cash flows using a 12% discount rate.  

4. DCF rate of return for the project.

Posted Date: 2/22/2013 7:57:26 AM | Location : United States







Related Discussions:- Calculate the cumulative cash flows, Assignment Help, Ask Question on Calculate the cumulative cash flows, Get Answer, Expert's Help, Calculate the cumulative cash flows Discussions

Write discussion on Calculate the cumulative cash flows
Your posts are moderated
Related Questions
First in First Out or FIFO FIFO method is based upon the assumption such stock purchased first is issued first. Prices of stock purchased first are employed to determine the v

Illustration of Overhead Variance Analysis Again for intentions of our demonstrations in overhead variance analysis, we will suppose the given basic data for company in the pr

GZ Inc. manufactures two products that require both machine processing and labor operations. Although there is unlimited demand for both products, GZ could devote all its capacitie

Thomas Crown expects to earn the following stream of annual income for the next four years:- $41,000; $45,000; $38,000 and $50,000. Although he has adopted the Pay Yourself First s

A company has an authorized share capital of 250 million divided into 1,500,000 ordinary shares of sh.100 each and 1,000,000 preference shares of sh.100 each. 1,000,000 ordinary sh

The book of Deven Verma could not be tallied. The account transferred the difference of Rs. 1.270 in the suspense account on the debit side. the following mistakes were found later

cost accounting is said to three different phases ?? name them.

how variable cost help in decision making.with suitable example

A company provides several different services to its customers from a single office. Fixed costs of the office, including staff costs, are absorbed into the company's service costs

Estimate the Growth rate of stock Data stock price = 53 rate of return= 12% expected dividend = 3.15 Formula : Expected return  = (dividend paid + capital