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  • Dallas Project

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    Michael Lee
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    The document discusses allocating the costs of a real estate purchase and development project called the Dallas Project. It allocates 89% of the $33 million purchase price to undeveloped acreage, 1% to finished lots, and 10% to recreation facilities based on the corporation's property valuations. The projected net present value of the project is $143.18 million. The project is considered very profitable due to generating $274.98 million in after-tax net income over 10 years with positive cash flows and an 80% internal rate of return.

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    ACG 6305 Darryl Allen

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    The document discusses allocating the costs of a real estate purchase and development project called the Dallas Project. It allocates 89% of the $33 million purchase price to undeveloped acreage, 1% to finished lots, and 10% to recreation facilities based on the corporation's property valuations. The projected net present value of the project is $143.18 million. The project is considered very profitable due to generating $274.98 million in after-tax net income over 10 years with positive cash flows and an 80% internal rate of return.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    308 views1 page

    Dallas Project

    Uploaded by

    Michael Lee
    The document discusses allocating the costs of a real estate purchase and development project called the Dallas Project. It allocates 89% of the $33 million purchase price to undeveloped acreage, 1% to finished lots, and 10% to recreation facilities based on the corporation's property valuations. The projected net present value of the project is $143.18 million. The project is considered very profitable due to generating $274.98 million in after-tax net income over 10 years with positive cash flows and an 80% internal rate of return.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Teresa Badillo

    ACG 6305
    The Dallas Project
    After analyzing the information, I found that it would be best to allocate
    the purchase costs based on the real estate corporations valuations. They
    valued the undeveloped acreage at $89 million, finished lots at $1 million
    and the recreation facilities at $10 million. As shown on the following
    schedule, I allocated those percentages (89%, 1% and 10% respectively)
    based on what the purchase price was ($33,000,000). With this basis, the
    projected net present value was approximately $143,180,000.
    This project is a slam-dunk for the corporation because it generates
    $274,980,000 of net income after taxes and a net present value of
    $143,180,000. There are also positive cash flows throughout the decade
    after the initial purchase and this project has approximately an 80% internal
    rate of return. All this in mind, this project would be a very profitable one.

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