Question One-COMPULSORY An overseas developer has been exploring opportunities to do a high-rise development in Jamaica. He hired a local real estate agent who identified a suitable plot of land in the vicinity of the national stadium. The land is perfectly situated near shops, schools, hospital, recreational spaces and other facilities and amenities. The developer, Mr. Rich, intends to cover all the development costs out of pocket. He asked his team to guide him on whether or not the project will be profitable and how soon will he be able to recover his initial costs. The team assembled data on the costs and projected revenues for the development over a 5 year period and made some notes as follows: - The cost to acquire the land is $5,000,000.00 - The professional fees (architect/engineers, etc.) is $200,000.00 - The fee to obtain planning permission totals $50,000 - In order to minimize his initial pay-out to the local authority, he has negotiated to pay an additional $20,000 for the first 3 years after the development is completed. - The estimated annual building maintenance fee is $20,000.00. - The finished building will comprise of 10 studio units, 20 one-bedroom units and 25 twobedroom units. - Based on current market research, the studio units can be rented at $600.00 per month. the one-bedroom units $1000 per month, and the two bedroom units are to be rented at $1200 per month. - Taking account of the cost of capital, the team estimates that the discount rate should be 25% Assume that the building will be fully occupied immediately after completion. You are the junior member on Mr. Rich's team. The team lead has asked you to use the data above to do some preliminary assessments and state your recommendations. Correct answer without evidence of all calculation will not be awarded full marks