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Royal Golf Club is a freehold interest with 200 acre-lot located at Damansara. The property is a 32-hole golf course the ten-year-old building constructed with

Royal Golf Club is a freehold interest with 200 acre-lot located at Damansara. The property is a 32-hole golf course the ten-year-old building constructed with high quality finishes.

The golf course with mature trees and bushes, covered with well-kept grass, 40 sand traps and nine (9) ponds are well maintained. Fairways, tees, and greens are in excellent condition. Floodlights are installed for night play. Other facilities provided at the club include five (5) tennis court, two (2) 50 metres swimming pool, and two (2) squash courts and a gymnasium.

The income statement of the property for the past three years is as follows:

Revenue

RM

Membership fees

RM 5,000,000

Non-membership fees

RM 4,000,000

Banquet / F&B Operation

RM 814,000

Leisure & Sports

RM 100,000

Pro Shop and Driving range

RM 90,000

Other income

RM 150,000

Operating Expenses

Purchases

RM 202,000

Food & Beverages

RM 900,000

Reception/ Operation

RM 400,000

Leisure/ Sports

RM 150,000

General & Administrative

RM 450,000

Finance

RM 80,000

Housekeeping

RM 400,000

Marketing and Promotion

RM 200,000

Buggy and machine maintenance

RM 400,000

The operator share is 40%. An analysis of the rate of return for leisure properties is 9% per annum and bank interest rate is 9% per annum.

Determine the market value of the golf course for financing purpose.

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