What is the net present value of this project

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Reference no: EM133496597

Question: HouseForU Co. is planning to develop a condominium block of 100 residential units that would sell for $500k each. The land would cost $8m (to be paid immediately), planning would take 3 months, and construction would take one year after planning is completed and would cost $25m (40% to be paid at the beginning, 40% to be paid at halfway and 20% to be paid at completion). The planning, marketing and administrative expenses for the condominiums are expected to be $0.5m per month (to be paid at the end of each month). Sales of the condominiums would begin when construction is completed, and it is expected to take 2 month before the first units are sold. The Company expects to sell 20 units per month thereafter (payments of the units would be at the end of the month). What is the net present value of this project, if the Company policy is to use 15% as the discount rate for evaluating projects? Answer(rounded to thousands of dollars)

Reference no: EM133496597

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