Question
If I had $10,000,000 of funds (equity from issued capital) to invest. I have identified some investment options that you feel are worth investigating further.
If I had $10,000,000 of funds (equity from issued capital) to invest.
I have identified some investment options that you feel are worth investigating further.
These options are as follows:
Option 1 Subdivision of commercial land
$7,000,000 total investment cost
Expected sales value on completion $9,500,000
2 year project
$2,000,000 up front and the balance evenly spent over the remaining months
Bank will fund up to 70% of all upfront and construction costs.
Interest rate on debt 7.5%, paid monthly
Tax rate 28%
Option 2 Commercial investment property
$5,000,000 purchase price
7.5% yield on net rents
Bank will fund a maximum of 60% of purchase price
Interest rate 6.5%
P&I over a 15 year term until loan is at 50% LVR
5 yearly rent reviews, expect rent increase of 10% per rent review
Expect yield to remain at 7.5% into the future
Consider a sale at the end of year 10
Tax rate 28%
Option 3 Townhouse development
$8,000,000 investment cost
3 year project
$1,000,000 up front and the balance evenly over the term of the project
Bank will fund up to 65% of construction costs.
Revenue on completion of $12,500,000
Interest can be capitalised to the loan
Interest rate 6.5%
Tax rate 28%
Option 4 Business acquisition
EBIT per financial information supplied is $850,000
Depreciation is $50,000
Financial information does not include rent on a factory owned by the
vendor. Market rent is $300,000
Average capital expenditure is $100,000
The business can be brought for an Earnings Multiple of 5 times future
maintainable earnings (FME)
Working capital required is stock $400,000, Debtors $600,000, Accounts
payable $350,000
The bank will provide debt at 1.5 times EBITDA rounded to the nearest one
hundred thousand dollars
Interest rate is 7.5% interest only
I need to determine the investment options and which investments are the best option or options to invest in.
Could you help calculate the IRR, PV, FV, WACC, and NPV. if you are using Excel do share formula you are using
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