What is the estimated capital investment

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A commercial building design cost $91 /square-foot to construct eight years ago (for an 77,000.square-foot building). This construction cost has increased 5.5%, per year since then. Presently, your company is considering construction of a 130,000.square-foot building of the same design. The cost capacity factor is X = 0.91. In addition, it is estimated that working capital will be 4%, of construction costs, and that project management, engineering services, and overhead will be 4.2% 8%, and 30% respectively, of construction costs. Also, it is estimated that annual expenses in the next year of operation will be $6/square foot, and these are estimated to increase 5.67% per year thereafter. The future general inflation rate is estimated to be 6.69% per year, and the market-based MARR = 12%, Per Year (im).

a. What is the estimated capital investment for the 130,000-square-foot .

b. Based on a before-tax analysis, what is the PW for the first 10 years of owmership of the building.

c. What is the AW for the first 10 years of owmership of the building in real dollars R$.

Reference no: EM13821487

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