Question: Please answer the following questions in the document attached. I am lost and not understanding where I need to begin. Thank you! Waldo County, the

 Please answer the following questions in the document attached. I am

Please answer the following questions in the document attached. I am lost and not understanding where I need to begin.

Thank you!

lost and not understanding where I need to begin. Thank you! Waldo

Waldo County, the well-known real estate developer, worked long hours, and he expected his staff to do the same. So George Chavez was not surprised to receive a call from the boss just as George was about to leave for a long summer's weekend. Mr. County's wanted George to go over figures for a new $90 million outlet mall designed to intercept tourists heading downeast toward Maine. George's first task was to draw up a summary of the projected revenues and costs which is in the following table. Year 0 Investment: Land Construction Operations: Rentals Share of retail sales Operating and maintenance costs Real estate taxes 1 2 30 20 30 10 2 2 4 2 4 3 3 4 5-17 12 24 10 4 12 24 10 4 12 24 10 4 Note that the mall's revenues would come from two sources: The company would charge retailers an annual rent for the space they occupied and in addition it would receive 5% of each store's gross sales. Construction would likely take 3 years. The construction costs could be depreciated straight-line over 15 years starting at year 3. As in the case of the company's other developments, the mall would be built to the highest specifications and would not need to be rebuilt until year 17. The land was expected to retain its value, but could not be depreciated for tax purposes. Construction costs, revenues, operating and maintenance costs, and real estate taxes were all likely to rise in line with inflations, which was forecasted at 2% a year. The company's tax rate was 35% and the cost of capital was 9% in nominal terms. Some concerns are inflation is uncertain and what would happen if it jumped to 10%. Previous project fell through and store sales had turned out to be 40% below forecast. Another concern is that construction cost overruns and delay due to required zoning changes and environmental approvals. George had seen cases of 25% construction cost overruns and delays up to 12 months between purchase of the land and the start of construction. QUESTIONS: 1. What is the project's NPV, given the projections in the table above? 2. Conduct a sensitivity and a scenario analysis of the project. What do these analyses reveal about the project's risks and potential value

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