Explain what is the roic, Operation Management

Assignment Help:

(Oscar's Office Building) Oscar is considering getting into the real estate business. He's looking at buying an existing office building for $1.8 million in cash. He wants to estimate what his return on invested capital (ROIC) will be on an annual basis. The building has 14,000 square feet of rent-able space. He'd like to set the rent at $4.00 per square foot per month. However, he knows that demand depends on price. He estimates that the percentage of the building he can fill roughly follows the equation: % Occupied = 2 - 0.3*Rent (rent is in dollars per square foot per month) So, at $4.00, Oscar thinks he can fill about 80% of the office space. Oscar considers two categories of costs: variable costs, which are a function of the square feet occupied, and fixed costs. Fixed costs will be $8,000 per month and include such items as insurance, maintenance, and security. Variable costs cover such things as electricity and heat and run $1.25 per month for each square foot occupied. a. What is the ROIC? b. What would be the new ROIC if Oscar decides to charge rent of $5.00 per square foot per month?


Related Discussions:- Explain what is the roic

Explain important provisions of factory act, Explain important provisions o...

Explain important provisions of factory act, 1948. The significant provisions of Factories Act, 1948 are given below: a) Health: The following are the significant provisions

Explain rent-a-car liable for the injuries to the plaintiff, U.S. v. Farraj...

U.S. v. Farraj contended that he transmitted information, not goods. Do you think that position is correct? Q2) Phillips v. Budget Rent-a-Car Answer the question Is Budget Rent-a-C

Why the company operates an average of 20 days a month, A food processor us...

A food processor uses approximately 29,730 glass jars a month for its fruit juice product. Because of storage limitations, a lot size of 4,000 jars has been used. Monthly holding c

Compute the value of cash flow based on discount rate, Calculate the presen...

Calculate the present value of a stream of cash flows based on a discount rate of 8%. Annual cash flow is as follows 1. Year 1 = $100,000 2. Year 2 = $150,000 3. Year 3 = $200,0

Explain the link of operations strategy, Question 1: Describe the role ...

Question 1: Describe the role of operations in an Organisation. Link with other functions Issues Types of operational decisions Conclusion Explain the s

Explain development of the germ theory of disease, In the 19th century hosp...

In the 19th century hospitals had notorious reputations questionable places to visit, risky places to stay. What advances changed all this? a.development of the germ theory of d

Explain probabilities of various caseloads to be unreliable, The director o...

The director of social services of a county has learned that the state has mandated additional information requirements. This will place an additional burden on the agency. The dir

Location analysis, explain the series of steps involved and various factor...

explain the series of steps involved and various factor effecting location decion?

Rationalize your compensation as well benefits package, Rationalize your co...

Rationalize your compensation and benefits package. Be sure to indicate the research and considerations that went into the design of the compensation and benefits package.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd