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I.

Viewpoint:

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Mr. E. Locano

II. Statement of the Problem:

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To resell the property after developing it at only 360/sqm. Versus the 400/sqm of
other subdivisions in order to have a profitable and quick return in investment.

III. Objective:

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To identify the feasibility of applying a comparative pricing strategy, in order to have
a quick return.

IV. Areas of Consideration: (Using SWOT Analysis)

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Strength:
o Experienced developer
o Availability of funds

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Weakness:
o

000.000.0 Sundry selling expenses administrative expenses 0 800. Alternative Courses of Action - Alternative A (Selling price at 360/sqm) o In this alternative.000 4.000.000 sqm.0 Lawyers Fee 0 200.000.000. Find first the cost of land 10 hectares x 10. = 16.000. Computation: Note : 10 heactares = 10.000.0 . the land for development will be sold out in just one year but will not yield high profit because of the low selling price.0 160.- Opportunity: o Availability of land for development o Demand for house and lot in Metro Manila had increased - Threat: o Many Competitors o Economic Slow down V.400.000 x 160/sqm.0 Other cost Agents commission 0 Road and Improvements 0 2.000 sqm =100.000.0 Surveyors Fee 0 40.

200.600.0 0 .000.200.0 0 23.0 0 1.0 0 16. 10 hectares x10.0 360/sqm.000 x.000.600.000 sqm = 100. Less: Cost of land Total Income @ 360 25.0 add 0 Total cost of LAND 0 23.70(70% of the land is the actual percentage which you can only sell) 70.000 x 25.600.000. TOTAL INCOME @ P360/sqm.000.600.= 0 To find the income @ 360/sqm.000.0 7.000.000.0 A.000. at 360/sqm.

00 Computation for Alternative B Cost of Land Other Cost: Road Improvement Surveyor's Fee Selling Cost: Year 1 16.000.000.00 Year 3 20% sold 880.000.400.400.200.000.000.000.- Alternative B (Selling price at 400/sqm) o In this alternative.000.200.000.000.000.00 Computation for the following income for 3 years @460/sqm as follows: Year 1 Income multiply by 50% sold Year 1 Income 4.000.000.400.00 Year 2 Income multiply by 30% sold Year 2 Income 4.00 .000.000.00 0. Computation if he sells @400/sqm.00 160.000.400.00 0.000.320.000.00 Year 3 Income multiply by 20% sold Year 3 Income 4.000.3 1.000.00 2.2 880. the land for development will be sold out in three year but will yield a high profit because it will be sold at market price.400.00 Income @400/sqm for 3 years Year 1 50 % sold 2.000.000.00 Year 2 30 % sold 1.000.00 4.600.00 0.320.000. 28.00 160.00 - - 2.000 sqm.00 Year 2 Year 3 - - TOTAL 16. 10 hectares x10.00 To get the income Income @ 400/sqm Less: Cost of land Total Income for Year 1 @ 400/sqm.5 2.00 23.400.x70% x400 = 28.

268.200.000.00 8.000.91 7.000.000.644.375.000.600.949.000.00 0.008.00 (23.00 14.322.00 40.000.00 160.000.00 (866.000.816.00 20.000. 360/sqm at one year vs.920.000.00 0.000.00 3.000.00 12.00 3.000.00 0.120.000.800.00 0.000.000.000.00 4.000.00 100.322. Decision Matrix Directors Arlene Asuncion Bismark Bustonera Romeo Carlo Medina Grace Nacion Arman Tupaz Total VII.880.800.000.000.000.00 60.00 400. Alternative A 1 1 1 1 1 5 Alternative B 2 2 2 2 2 10 Recommendation - After carefully evaluating the two alternatives.400.0 0) 4.080.000.00 26. Even if it will take 3 years to be fully sold-out.00 14.000.000.000.00 1.00 1 21.000.000.375.000.000.460.00 23.00 23.644.460.000.137.600.00 7.000.91 1.512.00 200.86 4. Year 1 Year 2 Year 3 Total .200.880. 400/sqm for 3 years Selling price/sqm.00 40. we recommend that alternative B is more profitable than the alternative A.00 (21.00 Note: only year 1 and year 3 has the given percentage to make it 100%(for the 4.000.000.000.00 1.000.4m total income) we put 30% for 2nd year VI.00 8.00 240.080.00 1.00 1 14.00 (7.816.080.00 21.000.000.080.00 5.00 800.000.000.00 800.Agent Commission Lawyer's Fee Sundry Selling Expense Administraive Expense TOTAL Discount Factor Present Value Computation of Net Income Sales Discount Factor Present Value Computation of Net Income Sales Expenses ) Income ) 2.080.86 866.000.0 0) 26.00 28.00 (1.00 ) 6.920.

00) 30% 0 6.000.200.00) .949.00 (1.00) (8.080.00 6.120.000.120.00 3.268.000.00 3.600.680.080.600.137.537.200.268.00 100% 1.080.000.949.360/sqm 400/sqm Net Increments 50% 1.00 20% 0 3.00 (7.