What is the roic

Assignment Help Operation Management
Reference no: EM13231807

(Oscar's Office Building) Oscar is considering getting into the real estate business. He's looking at buying an existing office building for $1.8 million in cash. He wants to estimate what his return on invested capital (ROIC) will be on an annual basis. The building has 14,000 square feet of rent-able space. He'd like to set the rent at $4.00 per square foot per month. However, he knows that demand depends on price. He estimates that the percentage of the building he can fill roughly follows the equation: % Occupied = 2 - 0.3*Rent (rent is in dollars per square foot per month) So, at $4.00, Oscar thinks he can fill about 80% of the office space. Oscar considers two categories of costs: variable costs, which are a function of the square feet occupied, and fixed costs. Fixed costs will be $8,000 per month and include such items as insurance, maintenance, and security. Variable costs cover such things as electricity and heat and run $1.25 per month for each square foot occupied. a. What is the ROIC? b. What would be the new ROIC if Oscar decides to charge rent of $5.00 per square foot per month?

Reference no: EM13231807

Questions Cloud

What is the total cost of a package of dog biscuits : Are any constraints redundant? If so, which one or ones? (d) What is the total cost of a package of dog biscuits using the optimal mix?
Define decongestant ephedrine hydrochloride : calculate the pH of a 1.06 x 10^-2 M solution of decongestant ephedrine hydrochloride if the pKb of its conjugate bas is 3.86
Compute the price elasticity of demand for paint : Suppose you are a painter, and the price of a gallon of paint increases from $3.00 a gallon to $3.50 a gallon. Your usage of paint drops from 35 gallons a month to 20 gallons a month. Perform the following Compute the price elasticity of demand fo..
What is the probability that second item will be defective : A production process is known to produce a particular item in such a way that 5% of these are defective. If two items are randomly selected as they come off the production line, what is the probability that the second item will be defective?
What is the roic : Variable costs cover such things as electricity and heat and run $1.25 per month for each square foot occupied. a. What is the ROIC? b. What would be the new ROIC if Oscar decides to charge rent of $5.00 per square foot per month?
How is the patient and affordable care act of 2010 : How is the Patient and Affordable Care Act of 2010 (the "Health Care Reform Act") likely to reshape financial arrangements between hospitals, physicians, and other providers if Medicare makes a single payment for all care received by a beneficiary..
How skill set an it sales manager or who think broader skill : How does the skill set of an IT Sales Manager differ from that of the technical manager? Who do you think has the broader skills set
What is the most that the salary of workers in city can be : A factory operates in a village and employs 200 workers. The workers are willing to work for any salary. The items produced by the factory are sometimes more demanded by consumers than at other times. For this reason, the demand for workers
Explain what is delta g for the transfer : What is delta G for the transfer of 6 mol K+from blood plasma to the cellular fluid at body temperature(37C).  What is the minimum amount of work that must be used to transfer this K+

Reviews

Write a Review

Operation Management Questions & Answers

  What do you think the important objectives are for a mne

What do you think the important objectives are for a MNE to have effective compensation policies and why? Also, why is it important for MNEs to understand the compensation practices of other countries?

  What are three risks of not including best hr practices

What are three risks of not including best HR practices into the management of a project?

  Performed at the hospital''s expense

Beth Zion Hospital has just been informed that only the first 10 transplants must be performed at the hospital's expense.

  Explain why an event like the hawthorne studies

Explain why an event like the Hawthorne studies be a major turning point in the history of management even if the idea is later shown to be an error.

  How eco-efficiency can be implemented on an individual

Explain, with an example, how eco-efficiency can be implemented on an individual and a business scale.

  What is passion and why is it necessary

Class, Hatten (2009) discusses passion as one of the traits of successful entrepreneurs. So class, what is passion and why is it necessary to have passion to be a successful entrepreneur?

  Positive percentage number for the exchange rate impact

An exchange rate shift that causes the Sing$ to be stronger versus the US$ - signaled by a positive percentage number for the Exchange Rate Impact on Cost of Pairs shipped from an Asia-Pacific plant to North America

  Your chosen profession so far

For this unit, you will write a 3-5 page paper (excluding title and reference pages) summarizing what you have learned about your chosen profession so far.

  How many dvds should blockbuster order

How many DVDs should Blockbuster order and what is its expected profit and what is the profit that the studio makes given Blockbuster's actions?

  Illustrate what is the expected weekly output of cranks

the industry expects to achieve an efficiency level for the cranks of 85percent. Illustrate what is the expected weekly o/p of cranks for this company.

  Competitor stock evaluation

AirJet Best Parts, Inc. is concerned regarding recent changes in its stock prices for the company and would like to determine the stock prices for key competitors.

  Classify expected benefits also types of costs

Pretentious your budget is zero; provide a justification of Explain why your report will work. Within your explanation, Classify expected benefits also types of costs.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd