Alkaji Dan Bacheka, an investor with his own equity capital of N20,000,000 (Twenty Million Naira) wishes to invest in one of two mutually exclusive real estate projects A and Y. Project X is in Asokoro District of Alkuja and Project Y is in Treasure Estate, Port Harcourt. The net income flows for each of the projects are estimated as follows:
| Year | Project X (N’000) | Project Y (N’000) |
|---|---|---|
| 1 | 6,000 | 5,000 |
| 2 | 6,000 | 3,500 |
| 3 | 6,000 | 4,000 |
| 4 | 6,000 | 6,000 |
| 5 | 7,000 | 7,000 |
| 6 | 8,000 | 8,000 |
| 7 | 5,000 | 5,000 |
| 8 | 5,000 | 4,000 |
| 9 | 4,500 | 2,000 |
| 10 | 4,500 | 2,000 |
Assuming a discount rate of 25% on each of the projects, calculate the Net Present Value of the projects and use them to advise the investor on which of the projects to invest in with reasons.
300 Level Estate Management and Valuation Department exam questions and detailed answers. Download the answers…
200 Level Estate Management and Valuation Department exam questions and detailed answers. Download the answers…
200 Level Estate Management and Valuation Department exam questions and detailed answers. Download the answers…
200 Level Estate Management and Valuation Department exam questions and detailed answers. Download the answers…
200 Level Estate Management and Valuation Department exam questions and detailed answers. Download the answers…
200 Level Estate Management and Valuation Department exam questions and detailed answers. Download the answers…