Question
QUESTION 4 (30 MARKS) a. A small site with approval for the development of 640 square meters office building is offered for sale and a
QUESTION 4 (30 MARKS) a. A small site with approval for the development of 640 square meters office building is offered for sale and a developer wishes to know how much he can afford to bid for it. He estimates it will take one year to complete nd sell the development, that he will have to 16% per annum interest on borrowed money which is half from the amount of building and professional cost. The office building will cost RM400 per square meters to build including all site works and the provision of services. He also decides that he will acquire a profit of RM60,000. The office building is anticipated to have a market value of RM500,000. Below are some additional information: Professional fees such as architect's, planner's, quality surveyor's is 10% of building costs. Agents fees RM8,000 Legal expenses of sales for building RM12,000 Advertising costs of sale RM5,000 You are required to calculate the amount of residual sum. (17 marks) b. Return on Investment (ROI) need to be consider when we buy a new property like new house for rental.
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