Calculate the cumulative cash flows, Cost Accounting

Assignment Help:

Assume that you are the purchaser of the building at the end of the construction period, and you have paid the developer an amount which gives you a 7% annual return on net revenue generated by the building in its first year of occupancy.   

You do not pay tax, and you have paid for the building from your cash reserves - i.e. you are not borrowing money, nor are you charging yourself interest.  

Assume:  

(a) Gross rentals are reviewed every two years, and are increased by an amount relating to a CPI increase of 4% per annum.

(b) Outgoings increase annually by 5% per annum.  

(c) You make no further investment in the building.  

(d)  You calculate the building to command a 6.5% annual return to a buyer when it is sold at the end of the tenth year of operation.  

Calculate (over a 10 year period of ownership)  

1. Annual net cash flows.  

2. Cumulative cash flows.  

3. Net present value of the cash flows using a 12% discount rate.  

4. DCF rate of return for the project.


Related Discussions:- Calculate the cumulative cash flows

Relationship between cost accounting and business enterprise, Relationship ...

Relationship between Cost Accounting and Business Enterprise Cost accounting, like will be mentioned later to adopts a cost center approach to accounting for costs. A cost cen

Compute the payback period for the new hoist, Alameda Service center just p...

Alameda Service center just purchased an automobile hoist for $ 14000. The hoist has a 6 year lifeand an estimated salvage value of $1481. Installation costs were $3020, and freigh

Differential costing, What do you mean by differential costing ? How it dif...

What do you mean by differential costing ? How it differ from marginal costing ? explain its practical application with examples?

Compute the second years tax amortization, Smith Corporation purchased an i...

Smith Corporation purchased an intangible asset for $110,000. Compute the second year's tax amortization. The second year would be a full year's amortization. The company estimates

Estimate fixed overhead variances, Estimate Fixed Overhead Variances ...

Estimate Fixed Overhead Variances Referring to data, we can estimate the fixed overhead variances as given below: Budget for December 2003;

Estimate total money using marginal and average tax rate, Thomas Crown expe...

Thomas Crown expects to earn the following stream of annual income for the next four years:- $41,000; $45,000; $38,000 and $50,000. Although he has adopted the Pay Yourself First s

What is operating costing, Describe Operating Costing The Chartered Ins...

Describe Operating Costing The Chartered Institute of Management Accountants, London defines "operating cost" as "the cost of providing a service." Services performed may be in

Write Your Message!

Captcha
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