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You are an investor with £12 million cash to invest. You wish to purchase an office building with this ca three identical office buildings that are located in different areas of the same city. The following informa possible investments: Distance from the CBD (km) Floor space (square metres) Asking price (GBP) Management costs (GBP per square metre per month) 1. 2. 3. 4. 5. Building 1 1,000 8,000,000 15 Build Commercial rent in the central business district (CBD) is £60 per square metre per mon 5% for each kilometre located away from the CBD. Tip: Cumulatively means that, if the away from the CBD, rent decreases by 5% for the first kilometre (which gives you £57), second kilometre, which gives you £54. Building 2 has been certified as complying with sustainability standards. A suitable discount rate for all areas is 6%. There is a fountain outside Building 1 that you can persuade the local government to ren property. Similar renovations to properties in the area have increased the rent charged p The local government will impose a 2% tax, by the time you complete the purchase of th properties that are not certified as compliant with sustainability standards. Ignore the eff Question 1 Calculate the net present value and internal rate of return of each building assuming that net operating perpetuity. Round your calculated net present value to the nearest pound and your calculated internal You are an investor with £12 million cash to invest. You wish to purchase an office building with this ca three identical office buildings that are located in different areas of the same city. The following informa possible investments: Distance from the CBD (km) Floor space (square metres) Asking price (GBP) Management costs (GBP per square metre per month) 1. 2. 3. 4. 5. Building 1 1,000 8,000,000 15 Build Commercial rent in the central business district (CBD) is £60 per square metre per mon 5% for each kilometre located away from the CBD. Tip: Cumulatively means that, if the away from the CBD, rent decreases by 5% for the first kilometre (which gives you £57), second kilometre, which gives you £54. Building 2 has been certified as complying with sustainability standards. A suitable discount rate for all areas is 6%. There is a fountain outside Building 1 that you can persuade the local government to ren property. Similar renovations to properties in the area have increased the rent charged p The local government will impose a 2% tax, by the time you complete the purchase of th properties that are not certified as compliant with sustainability standards. Ignore the eff Question 1 Calculate the net present value and internal rate of return of each building assuming that net operating perpetuity. Round your calculated net present value to the nearest pound and your calculated internal
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Related Book For
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman
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