GROUP ASSIGNMENT 

Development Economics

 

This group assignment constitutes 30% of the total assessment. 

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A property Developer intends to develop a piece of freehold land measuring 10 acres 1 rood 10 pole beside Taylor’s University, Selangor. The land was purchased three years ago at RM15.00 per sq. ft. with a RM6,500,000.00 bank loan. During this period, the Developer had applied for land conversion, subdivision, planning and building plans approval.

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The proposed development shall be of mixed residential and commercial units comprising of 26’ x 80’ double storey shop/office lots, 22’ x 75’ double storey Terrace houses and 20’ x 60’ double storey Low Cost houses. Thirty percent (30%) of the development must be of low cost houses. The Developer intends to have fifteen percent (15%) of the total units to be double storey shop/office.

Development Order has now been granted and construction is ready to proceed. Construction shall take two years to complete.

As the project manager and cost consultant engaged for the proposed project. 

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Therefore, in a group of 6, we were needed to produce an analysis of the number of units for each type of houses that can be built for the proposed development project, a financial appraisal of the project using the Residue Method of Valuation and cash flow for the project based on ‘Sell-then-Build’ concept comprising of:

1. Monthly Cash Inflow

2. Monthly Cash Outflow

3. Quarter-Yearly Cash Flow

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Furthermore, we were asked to tabulate and calculate NPV of the project on quarter-yearly basis and give an overall analysis as well as comment on the viability of the project with a twelve percent (12%) cost of capital. Lastly, comment on the cash flow and viability of the project if it is based on a ‘Build-then-Sell’ concept (Assume 100% sales on completion of construction).

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From this assignment, I've learned to think analytically and apply proper calculation for the proposed development. My team members and I had really done an amazing job through proper scheduling of time for this assignment and our intense discussions on the calculation part really make us realize the importance of team work. It was an interesting group assignment overall.

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