Assume after graduation, you have been hired by Clayco Corp and were assigned to their real estate team. You are all ready to use what you learned to impress your new manager. Your first task was to help in assessing the feasibility of a $14.5 million investment in a new office tower project. Assume the project will start operation at year 0 after you invested the entire $14.5 million to purchase the land and perform the construction. You estimated the annual cost of operation and maintenance (including supplies and labor) to be $5.5 million for years 1-5 and then your annual costs for operation and maintenance will increase to $10.5 million for years 6-10. Your gross annual revenue is expected to be $10 million starting at year 1. Assume a MARR of 11.50%. Find the Net Present Value (NPV) and determine if you should advise your company to make this investment.

Answer rating: 100% (QA)

To find the Net Present Value NPV of the investment in the new office tower project we need to calcu... View the full answer