Question 01

ABC Company found two suitable buildings to purchase a new office block at
Colombo suburb area and they are planning to occupy the buildings for 20 years.
1. Advice the company management regarding the suitable building to be
purchased, using following information. Clearly mention any assumptions you
made. (Discounting rate 10%)
Building A

Building B

Rs. 300Mn

Rs. 400Mn

Legal costs associated with

purchase

2% of purchase
price

2% of purchase
price

Cost of improvement of the

building

Rs. 20Mn

Rs. 10Mn

Annual Maintenance cost

Rs. 20Mn

Rs. 10Mn

Annual energy cost

Rs. 12Mn

Rs. 12Mn

Rs. 10Mn (every 5

years)

Rs. 15Mn (every 6

years)

Rs. 50Mn (at 10th

year)

Rs. 150Mn

Rs. 250Mn

Purchasing Cost

Cost of repairs
Future expansion cost
Resale value of the building

(20 marks)
2. List any factors, other than those given above, which should be taken into
account before deciding on which building to be purchased.
(05 marks)

Question 02
XYZ Company wishes to expand their businesses by constructing a new shopping
complex in Hikkaduwa. The expected magnitude of the shopping complex is 7000
Sqm.
1. Propose the best estimating method to advice the client regarding the likely
cost of the project.
(05 marks)
2. Justify the answer for the above question by discussing the advantages and
disadvantages of the selected method.
(05 marks)
3. Calculate the approximate cost of the hotel using the above mentioned
technique. Clearly mention any assumptions you made. A typical unit rate for
a shopping complex : Rs. 80,000 95,000/Sqm
(05 marks)
4. What are the information required to calculate the approximate cost of the
shopping complex by using elemental cost planning technique.
(10 marks)