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The particular cost estimates/information for this 5 year old structure are listed in the table below. Cost Land Cost Building Cost Annual Upkeep Property Taxes
The particular cost estimates/information for this 5 year old structure are listed in the table below. Cost Land Cost Building Cost Annual Upkeep Property Taxes and Insurance Useful Life, N MARR Amount $1,000,000 $2,500,000 $150,000 5% of the Total Investment Costs 25 year 15% 1,000,000 plus 10% of Initial Building Cost MV(25) 2. Use the scenario of annual expenses increasing at a rate of 1.75% per year every year after EOY 1 and annual revenues increasing 1.25% at EOY 5 and then 1.25% from that value every 5 years. a. On the Basis of annual worth, is the project economically justified? b. Use percent change increments + 10% for each criterion from the base case. (AW based upon percent changes to EOY 1 cash flows for AE and FC. As well as percent changes to the base 85% occupancy) c. Develop a sensitivity graph showing the effect of changes in: first cost, occupancy rate and annual expenses on the annual worth of the project. d. Which criterion is the most sensitive/riskiest to change? e. What are the breakeven points under the part 2 conditions
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