Mr. Kim purchased a vacant land for 6,000,000 baht and the building construction costs is 10,500,000 baht 5 years ago.

The depreciation cost of building is 350,000 baht per year.

The investor's require rate of return is 12.5% and the investor wants to sell the property at the end of year 5.

Best case: Mr. Kim borrowed money 70% of total value with 6.5% interest rate for 30 yrs with monthly payment.

The current sale price is estimated for 20,800,000 with selling expense 3.5%. Tax is 32%.

ATCF (After Tax Cash Flow) Year1 is expected to be 1,050,000 and expected to increase 5% every year.

Base case: Mr. Kim borrowed money 70% of total value with 10% interest rate for 30 yrs with monthly payment.

The current sale price is estimated for 18,900,000 with selling expense 7%. Tax is 32%

The ATCF year1 is expected to be 885,750 and expected to increase 3.5% every year.

Worst case: Mr. Kim borrowed money 70% of total value with 12.5% interest rate for 30 yrs with monthly payment.

The current sale price is estimated for 17,999,000 with selling expense 7%. Tax is 33%

The ATCF year1 is expected to be 782,000 and expected to increase 1.5% every year.

Best case 25%, Base case 60%, Worst case 15%

Questions:

1.What is the expected IRR of the investment?

2.What is the standard deviation of IRR?

3.What is the coefficient of variation?

4.What is the expected NPV of the investment?

5.What is the standard deviation of NPV?

6.What is the coefficient of variation?

7.If the alternative investment offers a range of IRR at 22%-30% with the price of 1,790,000 Baht, what is your suggestion for Mr. Kim?