Topic: IRR (Internal Rate of Return) Analysis

37. Optimum Properties Corp. is considering the construction of a 50-unit condominium near the university belt area. The 15-year investment study shows the following data: Disbursements Revenue P8 000 000.00 Land after 15 years P43 Land 000 000.00 P25 000 000.00 Building 600 000.00 Bldg. after 15 years P8 P300 000.00 Maintenance/year P120 000.00 Rent/unit-yr Insurance and Realty Tax/year 12% With an estimated occupancy rate of 92% at all times, determine the acceptability of the venture using IRR. The company applies a 15% MARR on its investments. (Ans. Project is acceptable, 15.7%)