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A company is considering of land that could be developed into a class A office project. At the present time, the company believes that the site could support a 300,000 rentable square foot project with average rents of $ 20 per square foot and operating expenses equal to 40% of that amount. It also expects rents to grow at 3% indefinitely and believes that the coompany should earn a 12% return (r) on investment. The building would cost $100 per square foot to build. Required: a) What would the estimated property value and land value under the above assumptions. b) Suppose the land owner is asking for $12000000 for the land. Under the assumptions in part (a) would this project be feasible? c) if the land must be acquired for $ 12000000, returning to the assumptions in (a), how much of change in the following would have to occur to make the project feasible? ( Consider each item one at a time and hold all other variables constant.) i) Expected return on investment (r) ii) Expected growth in cash flows iii) Building cost iv) Rents
Name the four investments with specifics. - - Name the industry of your companies, and the type of mutual fund.
What is the beta of a security where the expected return is double that of the stock market, there is no correlation coefficient relative to the U.S. stock market, and the standard deviation of the stock market is .18? 0.00 2.00 1.00 1.25
Why might a non influential stock investment be perceived as a negative signal about the prospects of a company?
Economic Order Quantity. The Trektronics store begins each month with 740 phasers in stock. This stock is depleted each month and reordered. If the carrying cost per phaser is $26 per year and the fixed order cost is $340, what is the total carrying ..
What is the present value of an investment that has three cash flows of -$3000, $4,000, and $6,000? These cash flows occur at the end of year 1, 2, and 3 respectively. Use a discount rate (required rate of return) of 13.5%.
Stock J has a beta of 1.29 and an expected return of 13.61 percent, while Stock K has a beta of 0.84 and an expected return of 10.55 percent. You want a portfolio with the same risk as the market. What is the expected return of your portfolio?
John borrowed some money from a local bank, at year 0, with the intention of buying a car. He is to pay back his debt in five unequal annual deposits starting from year 1. The first deposit is going to be $3,000, and each successive payment will incr..
Mexican interest rates are normally substantially higher than U.S. interest rates. What does this imply about the inflation differential (Mexico inflation minus U.S. inflation), assuming that the peso interest rate is the same in both countries? Doe..
Romo Enterprises needs someone to supply it with 127,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. If your tax rate is 30 percent and you require a retur..
A firm’s bond currently sells for $1,040, has a 7% coupon interest rate and $1,000 par value, pays interest annually, and has 8 years to maturity. The firm’s corporate tax rate is 35%. What is the after-tax cost of the bond?
Summerdahl Resorts' common stock is currently trading at $23.00 per share. The stock is expected to pay a dividend of $1.75 a share at the end of the year (D1 = $1.75), and the dividend is expected to grow at a constant rate of 3% a year. What is the..
Assume that you manage a risky portfolio with an expected rate of return of 14% and a standard deviation of 30% The T-bill rate is 5% A client prefers to invest in your portfolio a proportion (y) that maximizes the expected return on the overall port..
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