A large oil company has been invited to get involved in a project to build a...

 

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A large oil company has been invited to get involved in a project to build a parking facility in the centre of Frankfurt. The project includes a 450-car public parking lot, a 200-car garage and a petrol station covering 1,000 m². It will take 1 year to build, and a 30-year concession to run the facility will be granted by the municipality (after construction has been completed). Total capital expenditure will be €8,400,000 and working capital will be nil. The annual income statement for the project after the construction looks like this: Charges Operating Depreciation and amortisation Income tax expense Net profits 670,000 280,000 1,000,000 1,300,000 Revenues Parking places Garage Petrol station 1,680,000 770,000 800,000 3,250,000 3,250,000 Calculate the average accounting return on the project, the payback ratio, the net present value at 10% and the internal rate of return. Is the average accounting return equal to the average of the annual returns on the project? A large oil company has been invited to get involved in a project to build a parking facility in the centre of Frankfurt. The project includes a 450-car public parking lot, a 200-car garage and a petrol station covering 1,000 m². It will take 1 year to build, and a 30-year concession to run the facility will be granted by the municipality (after construction has been completed). Total capital expenditure will be €8,400,000 and working capital will be nil. The annual income statement for the project after the construction looks like this: Charges Operating Depreciation and amortisation Income tax expense Net profits 670,000 280,000 1,000,000 1,300,000 Revenues Parking places Garage Petrol station 1,680,000 770,000 800,000 3,250,000 3,250,000 Calculate the average accounting return on the project, the payback ratio, the net present value at 10% and the internal rate of return. Is the average accounting return equal to the average of the annual returns on the project?

Answer rating: 100% (QA)

Average Accounting Return Average accounting return Average Net Profit Average Investment 1300000 84... View the full answer