17125 Development Feasibility and Modelling - Case Study

Assignment Task

Valuation / Feasibility Methodology

1) Hypothetical Development (Residual) method:

•  Adopt a Profit & Risk factor of 20%

2) Discounted Cash Flow method:

• Adopt a Discount rate (Target IRR) of 14% for the project

• Construct spreadshee columns based on monthly cash flows in arrears unless otherwise specified.

Note: Students are able to adopt different Profit and Risk Margin or Discount rate if their risk profile or market evidence suggests variation to the rates stated.

Property Overview

54 Terry Road, Rouse Hill, NSW is a DA approved townhouse site currently on the market. The development site is located within close proximity to the Tallawong Metro Station and town centre, with land size of 2.1Ha*, and a DA approval for 43 Torrens titled townhouses designed by the renowned architectural firm KANNFINCH. The site is ideal for a convenient suburban lifestyle, within a short drive to Westplex, Bella Vista and Norwest Business Park, Rouse Hill Shopping Centre and Schofields Village.

Construction Assumptions

• You have received a QS report for the project dated in 2018. Assume construction costs have escalated by 4.75% per annum since this report.

• You anticipate that the demolition will start in month 2 and take 1 month to complete. You anticipate that the construction will start in month 3 and take 24 months to complete.

Marketing Assumptions

• You anticipate marketing will commence in month 4.

• You have allowed marketing costs of $150,000 for the initial month and $15,000 per month thereafter until sold out.

Land Holding Cost Assumptions

• Council Rates - $20,000 per annum

• Water Rates - $15,000 per annum

• Land Tax - $180,000 per annum

• Insurances - $10,000 per annum

These costs are budgeted by you on a quarterly in advance basis starting in month 1. Following the settlement of any individual lot, building outgoings are recoverable from each lot owner on the basis of quarterly in advance. 

This Accounting and Finance Assignment Help has been solved by our Accounting and Finance Experts at My Uni Papers. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+ Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.