PROJECT INVESTMENT ANALYSIS ASSIGNMENT - City Highrise Complex Development Option

The aim of this project is to introduce participants to concepts of Financial Feasibility Modelling and the use of spreadsheets for feasibility exercises.

Assume that you have been appointed as a financial consultant by an investment company to carry out a financial feasibility study for the proposed Office Development Complex Project.

Prepare a report with your recommendations to the Director of the Investment Company to justify the financial viability of this proposed development.

THE ANALYSIS

Part "A"

1. Calculate total cost of the Development at 1st July 2018 value.

2. Preparing a development plan (including the sale of the apartments) by assuming that demolition; land development and design and construction will start on 1st October 2018.

3. Prepare a cash flow schedule starting on 1st July 2018.

4. Estimate the net income on completion of project, 1st July 2021

5. Calculate:

- Total development cost

- Project finance cost

- Cost escalation.

6. Calculate the initial project development yield on completion of the project.

Part "B" - Assuming the entire facility will be sold to John Wiley Pty Ltd. on completion (2021) at a price that will be 5% yield to John Wiley Pty Ltd. on the first year of ownership 2021. Calculate for John Wiley Pty Ltd.

1. The Price at which John Wiley Pty Ltd. will purchase the entire facility.

2. The original developer's profit/loss.

3. Generate an Annual Net Cash Flow for John Wiley Pty Ltd. for 10 years.

4. Net Present Value of the John Wiley Pty Ltd.'s cash flow using 9% discount rate (Base year 2021).

5. Assuming John Wiley Pty Ltd. sell the Facility for $900 million at the end of 10th year of ownership (year 2031), calculate the Net Present Value of sale. (Base year 2021). Discount rate is 9%

6. Calculate the Profit & IRR John Wiley Pty Ltd. will make at 2021 value.

Part "C" - Assess the impact of changing the debt: equity ratio to 80: 20 and 50: 50.

Part "D" - 1. List all possible risks which may have an influence on this development proposal

2. Identify three (3) key risk areas that need further evaluation from the above list.

3. Carry out sensitivity/risk analysis on the above three key areas which may have greater concern on the project development.

Part "E" - List all assumptions at the front of your report.

RECOMMENDED REPORT STRUCTURE

• Cover
• Checklist
• Letter to the Managing Director
• List of Contents
• Executive Summary - Outline range of Recommendations
• Brief outline of the project
• List of Assumptions
• Methodology
• Spreadsheet Computations & Graphs/Charts.
• Risk and Sensitivity Analysis
• Discussion and Recommendations
• References.
• Electronic files Submission - Saved in a USB with file names
• Any other relevant information.
• Copy of the assignment brief.

Attachment:- Assignment File.rar