Each DeRight wanted to purchase a property large enough to attract the interest of a professional real estate management company to relieve them of the burden of daily management, and they wanted a minimum leverage return of their investments of 12% after tax. With the four promising investment properties located, Angus feels that these will be more then suitable for his clients, as the DeRight’s seem to be very enthusiastic about them. With time being valuable to Angus, he also wanted to make sure he was providing a preliminary analysis that would be worthwhile to his clients. Out of the 4 properties they will be viewing, two of the properties will be apartment complexes, and the final two will be office buildings that are showing great revenue returns as well as close to full occupancies. Whichever route they chose to go, keeping the units filled with the lowest possible vacancy will be vital to remain successful over the 10 year holding periods estimated for each property.…
Determine the optimal weighted average cost of capital and discuss the use of multiple valuation techniques in reducing risks.…
On March 23rd, 2017, Kendra Tew, a Community Assistant at The Varsity Housing, authorized a preliminary study that addresses the feasibility of introducing a Dunkin’ Donuts store in the vacant medium-sized retail space that is available near the main entrance of the complex as well as survey that indicates the number of prospective customers around the area. We have completed, to a reasonable extent, the first, second, third and fourth task of our major project: researching how to lease quality space in a privately…
Pearland Town Center is a fairly new shopping center that is comprised of more than 80 small and big name retail stores that includes a number of restaurant chains, i.e., HEB, Academy, Dillard’s, Macy’s, Burlington Coat Factory, Lupe Tortillas, Chili’s, Olive Garden, Gringos, etc. These businesses have created approximately 1,500 jobs and are positioned to generate 250 million dollars in annual sales. Pearland Town Center has positioned itself conveniently outside of an upscale subdivision, Shadow Creek Ranch, with homes ranging from 150,000 to 1 million dollars. When completed, this subdivision will offer over 7,000 new homes to future Pearland residents that will eventually create and harvest a more robust economy for the city. One is only to assume that as the population growth rate for Pearland is on a steady increase, and families continue to establish themselves, that this city will offer more opportunities for the next generation of Pearland…
The expected return of potential investment building: By generating my potential investment return and comparing it with the return of the real estate as well as…
In March 1985, Marty Wood, the senior VP and CFO is faced with an important opportunity. He believes that changes in the food industry will yield significant opportunities for Flowers Industry. As such, he wants to raise $50 million dollars for investment capital. The purpose of the case is to debate which method of raising the money is best. The options are long term securities, common stock, straight debt issue, and convertible subordinated debentures. He seeks information from bankers and analysts, but eventually has to make a decision himself.…
mall location? (Data are from a project by MBA students Steve Bennett, Alicia Morais, Steve…
Berkshire Hathaway Inc. is an American multinational conglomerate holding company headquartered in Omaha, Nebraska, United States, that oversees and manages a number of subsidiary companies. Berkshire Hathaway Inc. has a goal to increase its ownership of first-class businesses. Berkshire Hathaway Inc. must determine if the project is worthwhile. One way an organization can determine its worth of a project is by using the valuation process. This process links risk and return to help estimate the worth (Gitman, 2009). According to Investopedia,” market value is often different from book value because the market takes into account future growth potential.” This paper will show 6 different valuation models showing the market price of Berkshire Hathaway Inc.’s debt, if any, and equity. Along with the models this paper will show calculations to support these findings, including those involving rates of return. Finally, Team D will defend which valuation model best supports their findings.…
Walmart, a super retail store that offers a product for almost all needs at a low price, is guilty of closing many local mom and pop shops. The documentary film “Walmart the High Cost of Low Price” illustrates the effects felt by the local small business owners when a new Walmart opens in the area. Usually when there is a grand opening of a new business in an area there is a decrease in sales. When someone as large as Walmart moves into the area it is almost impossible to keep a local shop open for long because of the overhead compared to the huge decrease in sales. This affect is not only felt by business owners but also by the surrounding community. Home owner Jon Hunter got his house appraised to sell, and because of the new Walmart soon…
This case presents the cash flows of eight unidentified investments, all of equal initial investment size. The student’s task is to rank the projects. The first objective of the case is to examine critically the principal capital-budgeting criteria. A second objective is to consider the problem that arises when net present value (NPV) and internal rate of return (IRR) disagree as to the ranking of two mutually exclusive projects. Finally, the case is a vehicle for introducing the problem created by attempting to rank projects of unequal life and the solution to that difficulty criterion.…
Based on a comparison of discounted cash flows (DCF) and related financial metrics, the second option has potential for the strongest financial performance. Option 2 yields the highest NPV of nearly $5.5 million, which is 58% higher than the next best outcome in scenario 4, and 75% higher than the poorest outcome in scenario 1 (Exhibit A). Lastly, option 2’s IRR is 35%, which is greater than Oakmont City’s required 10% ROI, and thus making the project financially feasible.…
Open more outlets – untapped growth potential in a number of suburban markets (see Exhibit 3)…
I have been advised that any projects chosen should have an accounting rate of return at least 15% and company’s cost of capital is 10%. The cost of investment should be recovered within four years.…
5. What lessons regarding the financing of large, Greenfield projects do you draw from this case…
3. How was the transaction structure designed to minimize investor exposure to project risk? ……………………………….....7…