A private company in Texas will construct a warehouse facility. It will be a four- hundred-thousand...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A private company in Texas will construct a warehouse facility. It will be a four- hundred-thousand square-foot warehouse. Two project scenarios have been given. For these two scenarios, the Present Worth Analysis must be calculated to determine which of the two is more economical. The more economical and logical scenario shall be chosen for the project. Both scenarios have several expenses including site work, construction, landscape and building maintenance, pavement rehabilitation, and utilities. Scenario 1 The first scenario has a one-phase construction process that lasts 1 engineering design will start right away taking a year to complete. The civil engineer is going to be paid 60% of the total fee when land development approvals are accepted (year 1). The other 40% is going to be paid when the site work is completed (year 2). The architectural engineer will design the building at the same time the site work is being constructed. He will be paid 60% of the total fee when the design is completed (year 2) and the other 40% when the construction is completed (year 3). year. The civil ASSUMPTIONS Making a few general assumptions helped to make the calculations and decisions easier and consistent. 1. There will not be trouble finding a tenant as soon as leasing is offered. This eliminates the possibility of not filling the warehouse due to lack of rental interest. 2. All necessary tools and furniture for the space was previously purchased and therefore not included in the calculations. 3. When discussing financing, the interest rate was based on assumption. The assumption was made for a 3% annual rate. an educated 4. The assumption was made that there will be 60 employers working in the facility. This assumption was required for the costs of sewer and water that must be considered. Scenario 1: Еxpenses: The Civil Engineer gets a $105,000 fee. (60% on year 1) and (40% on year 2). The site work costs $800,000, to be paid on year 2. The Architectural Engineer gets a $2,000,000 for the design. (60% on year 2) and (40% on year 3) The additional 2500 squared-foot office construction costs $200,000, to be paid on year 3. The building construction costs $49,000,000 to be paid on year 3. The retrofit for the building costs $600,000 to be paid on year 9. The pavement rehabilitation costs $180,000 to be paid on years 9, 14,19. The advertisement for leasing costs $1,500 annually on years 2,3, and 4. The landscape maintenance costs $3000 annually between the years 3 thru 20. The snow removal costs $1,200 annually between the years 3 thru 20. The insurance costs $10,000 annually between the years 3 thru 20. The general building maintenance costs $1,000,000 annually between the years 3 thru 20. The electricity costs $450,000 annually between the years 3 thru 20. The sewer costs $2,500 annually between the years 3 thru 20. The water costs $1,000 annually between the years 3 thru 20. The fire suppression costs $600 annually between the years 3 thru 20. The loan payment is $2,300,000 annually between the years 1 thru 20. Income: The loan income is a total of $40,500,000 on year 1. The lease income is $3,000,000 annually between the years 4 thru 9. The rental income on the other side during the lease is $2,400,000 annually between the years 4 thru 9. The rental income is $4,700,000 annually between the years 10 thru 20. MAKE SURE TO SUBMIT THE FOLLOWING: 1. SHOW ALL YOUR WORK TO RECEIVE FULL CREDIT. ALL WORK MUST BE CLEAR AND FOLLOW A LOGICAL PATTERN OTHERWISE YOU WILL NOT GET FULL CREDIT ONLY PARTIAL CREDIT EVEN IF YOUR CONCLUSION IS CORRECT (50 PTS.). 2. INCLUDE THE CASH FLOW FOR BOTH SCENARIOS (30 PTS.). 3. DO NOT FORGET TO MAKE YOUR CONCLUSION (WHICH SCENARIO IS MORE ECONOMICAL) (20 PTS.). A private company in Texas will construct a warehouse facility. It will be a four- hundred-thousand square-foot warehouse. Two project scenarios have been given. For these two scenarios, the Present Worth Analysis must be calculated to determine which of the two is more economical. The more economical and logical scenario shall be chosen for the project. Both scenarios have several expenses including site work, construction, landscape and building maintenance, pavement rehabilitation, and utilities. Scenario 1 The first scenario has a one-phase construction process that lasts 1 engineering design will start right away taking a year to complete. The civil engineer is going to be paid 60% of the total fee when land development approvals are accepted (year 1). The other 40% is going to be paid when the site work is completed (year 2). The architectural engineer will design the building at the same time the site work is being constructed. He will be paid 60% of the total fee when the design is completed (year 2) and the other 40% when the construction is completed (year 3). year. The civil ASSUMPTIONS Making a few general assumptions helped to make the calculations and decisions easier and consistent. 1. There will not be trouble finding a tenant as soon as leasing is offered. This eliminates the possibility of not filling the warehouse due to lack of rental interest. 2. All necessary tools and furniture for the space was previously purchased and therefore not included in the calculations. 3. When discussing financing, the interest rate was based on assumption. The assumption was made for a 3% annual rate. an educated 4. The assumption was made that there will be 60 employers working in the facility. This assumption was required for the costs of sewer and water that must be considered. Scenario 1: Еxpenses: The Civil Engineer gets a $105,000 fee. (60% on year 1) and (40% on year 2). The site work costs $800,000, to be paid on year 2. The Architectural Engineer gets a $2,000,000 for the design. (60% on year 2) and (40% on year 3) The additional 2500 squared-foot office construction costs $200,000, to be paid on year 3. The building construction costs $49,000,000 to be paid on year 3. The retrofit for the building costs $600,000 to be paid on year 9. The pavement rehabilitation costs $180,000 to be paid on years 9, 14,19. The advertisement for leasing costs $1,500 annually on years 2,3, and 4. The landscape maintenance costs $3000 annually between the years 3 thru 20. The snow removal costs $1,200 annually between the years 3 thru 20. The insurance costs $10,000 annually between the years 3 thru 20. The general building maintenance costs $1,000,000 annually between the years 3 thru 20. The electricity costs $450,000 annually between the years 3 thru 20. The sewer costs $2,500 annually between the years 3 thru 20. The water costs $1,000 annually between the years 3 thru 20. The fire suppression costs $600 annually between the years 3 thru 20. The loan payment is $2,300,000 annually between the years 1 thru 20. Income: The loan income is a total of $40,500,000 on year 1. The lease income is $3,000,000 annually between the years 4 thru 9. The rental income on the other side during the lease is $2,400,000 annually between the years 4 thru 9. The rental income is $4,700,000 annually between the years 10 thru 20. MAKE SURE TO SUBMIT THE FOLLOWING: 1. SHOW ALL YOUR WORK TO RECEIVE FULL CREDIT. ALL WORK MUST BE CLEAR AND FOLLOW A LOGICAL PATTERN OTHERWISE YOU WILL NOT GET FULL CREDIT ONLY PARTIAL CREDIT EVEN IF YOUR CONCLUSION IS CORRECT (50 PTS.). 2. INCLUDE THE CASH FLOW FOR BOTH SCENARIOS (30 PTS.). 3. DO NOT FORGET TO MAKE YOUR CONCLUSION (WHICH SCENARIO IS MORE ECONOMICAL) (20 PTS.).
Expert Answer:
Related Book For
Financial Institutions Management A Risk Management Approach
ISBN: 978-0071051590
8th edition
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
Posted Date:
Students also viewed these mathematics questions
-
In order to determine which of the three excavation sites could have potentially contributed to the sedimentation of the three lakes, it is necessary to determine the watershed boundaries and the...
-
A bank is trying to determine which of two machines to rent for check processing. Machine 1 rents for $10,000 per year and processes 1000 checks per hour. Machine 2 rents for $15,000 per year and...
-
A biologist would like to determine which of two brands of weed killer, X or Y, is less likely to harm the plants in a garden at the university. Before spraying near the plants, the biologist decides...
-
Find the maximum of f(x,y) = x + y - x - y - xy
-
Between 2 a.m. and 4 a.m. at an all-night pizza parlor, the mean time between arrival of telephone pizza orders is 20 minutes. (a) Find the median wait for pizza order arrivals. (b) Explain why the...
-
Hot exhaust gases are used in a shell-and-tube exchanger to heat 2.5 kg/s of water from 35 to 85C. The gases assumed to have the properties of air, enter at 200C and leave at 93C. The overall heat...
-
Shawn Andrews opened a dental practice in Spokane, Washington as a corporation. The following transactions took place in June: Using the steps outlined in the five-step transaction analysis, record...
-
Presented below are two independent situations. 1. Speedy Car Rental leased a car to Mayfield Company for one year. Terms of the operating lease agreement call for monthly payments of $500. 2. On...
-
October November December Budgeted S&A Expenses Salary Expense 10,000 10,500 11,000 Sales Commissions 5% of Sales 5,000 5,500 5,300 Insurance Expense 2,000 2,000 2,000 Rent 2,400 2,400 2,400...
-
An investment company offers a bond linked to the FT100 index. On redemption the bond pays the face value plus the largest of A: the face value times the change in the index. Or B: 5% yearly interest...
-
CASE STUDY Although Bounce Fitness is known in their local communities, it is seeking an extended presence and identity to promote the companys unique approach and lifestyle vision to an older...
-
Solve b. -4 (x y 4) (x 19 ) X xy-2
-
Lisa Anderson, a college junior, normally prides herself on keeping control of her finances. But the fall semester was a disaster. She contracted West Nile virus and was very sick for months. It was...
-
If the immune system is stressed, then what happens to body function?
-
Part 1 : Find Southwest Airlines income statement on NASDAQ.com. With the most recent annual report, estimate their net marketing contributions for one year in the past five years. What would their...
-
What is the total amount you will have to repay for your $49,000 student loan if the interest rate is 4% APR with monthly compounding and you pay equal monthly payments over the 10 year life of the...
-
You are owed $ 7 , 5 0 0 to be paid in one year. Instead you are requested to accept three equal and unknown payments ( call them X ) due today, 6 months from now, and 2 . 5 years from now. What is...
-
How is use of the word consistent helpful in fraud reports?
-
What are usury ceilings? How does technology create regulatory risk?
-
Consider these four types of risks: credit, foreign exchange, market, and sovereign. These risks can be separated into two pairs of risk types in which each pair consists of two related risk types,...
-
Metrobank offers one-year loans with a 9 percent stated or base rate, charges a 0.25 percent loan origination fee, imposes a 10 percent compensating balance requirement, and must hold a 6 percent...
-
Crank \(C B\) rotates about the horizontal axis with an angular velocity \(\omega_{1}=6 \mathrm{rad} / \mathrm{s}\) which is constant for a short interval of motion which includes the position shown....
-
Determine the angular acceleration \(\dot{\omega}_{2}\) of crank \(A D\) in Sample Problem 7/3 for the conditions cited. Also find the angular acceleration \(\dot{\omega}_{n}\) of link \(A B\)....
-
The electric motor with an attached disk is running at a constant low speed of \(120 \mathrm{rev} / \mathrm{min}\) in the direction shown. Its housing and mounting base are initially at rest. The...
Study smarter with the SolutionInn App