CALCULATE THE NPV AND IRR FOR BOTH PROJECTS WITH COST OF CAPITAL 68%
Annex 2: LGF-Exam: Description of the two project options Project option 1:Your company plans to construct 700 housing units in your city. Out of 700 units, 600 will be sold and 100 of them will be rented for a period of 20 years. Rental income from each unit will be 4,000 EUR per year. The rented 100 units will be sold after 20 years. It is estimated that each rented unit will be sold for 70,000 EUR (after 20 years). Construction Cost of each housing unit is 100,000 EUR. Each housing unit will be sold for a price of 120,000 EUR. For construction and management of the housing project, a sales office will be constructed which will cost 2,000,000 EUR. Staff costs during the project period will be 300,000 EUR per year. The project will be completed" in 3 years. For this project, your company has borrowed money and cost of financing per year will be 3,000,000 EUR for the project duration. Project option 2: Your company plans to construct 500 housing units in your city. Out of 500 units, 450 will be sold and 50 of them will be rented for a period of 15 years. Rental income from each unit will be 4,000 EUR per year. The rented 50 units will be sold after 15 years. It is estimated that each rented unit will be sold for 80,000 EUR (after 15 years). Construction Cost of each housing unit is 90,000 EUR. Each housing unit will be sold for a price of 135,000 EUR. For construction and management of the housing project, a sales office will be constructed which will cost 3,000,000 EUR. Staff costs during the project period will be 250,000 EUR per year. The project will be completed in 2 years. For this project, your company has borrowed money and cost of financing per year will be 2,500,000 EUR for the project duration. Annex 2: LGF-Exam: Description of the two project options Project option 1:Your company plans to construct 700 housing units in your city. Out of 700 units, 600 will be sold and 100 of them will be rented for a period of 20 years. Rental income from each unit will be 4,000 EUR per year. The rented 100 units will be sold after 20 years. It is estimated that each rented unit will be sold for 70,000 EUR (after 20 years). Construction Cost of each housing unit is 100,000 EUR. Each housing unit will be sold for a price of 120,000 EUR. For construction and management of the housing project, a sales office will be constructed which will cost 2,000,000 EUR. Staff costs during the project period will be 300,000 EUR per year. The project will be completed" in 3 years. For this project, your company has borrowed money and cost of financing per year will be 3,000,000 EUR for the project duration. Project option 2: Your company plans to construct 500 housing units in your city. Out of 500 units, 450 will be sold and 50 of them will be rented for a period of 15 years. Rental income from each unit will be 4,000 EUR per year. The rented 50 units will be sold after 15 years. It is estimated that each rented unit will be sold for 80,000 EUR (after 15 years). Construction Cost of each housing unit is 90,000 EUR. Each housing unit will be sold for a price of 135,000 EUR. For construction and management of the housing project, a sales office will be constructed which will cost 3,000,000 EUR. Staff costs during the project period will be 250,000 EUR per year. The project will be completed in 2 years. For this project, your company has borrowed money and cost of financing per year will be 2,500,000 EUR for the project duration
