CONFIDENTIAL, APIJUN 2019/RES541 \SE e) 4 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE : INVESTMENT APPRAISAL COURSE CODE : RESS11 EXAMINATION : JUNE 2019 TIME 3 HOURS INSTRUCTIONS TO CANDIDATES 1 This question paper consists of two (2) parts: PART A (2 Questions) PART B (2 Questions) 2 ‘Answer ALL questions in the separate Answer Booklets. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the invigilator. 4 Please check to make sure that this examination pack consists of i) _ the Question Paper ii) two (2) Answer Booklets ~ provided by the Faculty iil) Parry's Valuation Table ~ provided by the Faculty 5. Answer ALL questions in English. DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 4 printed pages © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 2 APIJUN 2019/RES511 PART A QUESTION 4 a) i) Define the income generated from the real property. (4 marks) ii) Explain any three (3) approaches to determine rental value. (7 marks) b) A freehold interest of 10-storey commercial in a city centre recently leased for a term of 30 years at net rentals of RM300,000.00 per annum for first 15 years and RM450,000.00 per annum the remaining 15 years. The market rental value is RM750,000.00 with owner responsible for all property outgoings. Based on the market study, the yield of similar properties is 9% per annum (gross). Determine a capital value of subject property by using the conventional term and reversion method of valuation. (14 marks) QUESTION 2 a) Elaborate the similarities and the differences between viability and profitability index used in the investment appraisal as tool of decision-making process. (10 marks) b) A freehold interest of 5-storey commercial shopping in a town centre having a gross floor area at 100,000 square feet recently offered for sale to an investor at RM5.0 millon. The estimated all risks yield is 9% per annum (net). Based on the market study made, the property investment could be lease at a net market rental value of RM500,000.00 per annum for a term of 15 years with reviews every 5 years. The investor plans to acquire loan from a local commercial bank at 80% from the selling price with a fixed interest rate at 8.5% per annum. Estimated the rental growth is 1.5% per annum. Calculate the Return on Capital Employed (ROCE) of property investment by using the payback method if the investor target yield is 10% per annum. (15 marks) @ Hak Cipta Universiti Teknolog! MARA, CONFIDENTIAL,CONFIDENTIAL, 3 APIJUN 2019/RES511 PARTB QUESTION 1 In order to stay competitive, a property developer is trying to establish the most effective practice to be implemented in his up-coming construction project. He has asked for your advice, giving you details of the activities involved in the project and the estimated duration of each activity as well as the immediate preceding activity ~ Activity Description Estimated Duration Reference (weeks) Excavation 2 Laying of foundation 4 Putting up the rough 10 wall Roofing External plumbing [Internal plumbing External siding External painting Electrical work Putting up the wallboard Flooring Interior painting mea External fixtures Internal fixtures. o|mlajo| im [o) zfele|ma) zle\-|x\_|-|z]o/a\mlo| ola|>| @|rsJor) a] 00|~s] 0] )an] ao I L L t Fa FI =| You are required to determine the following: a) The critical path model to represent the logical sequence of the activities. (10 marks) b) The float table, showing the critical and non-critical activities and the available floats. (10 marks) ©) The critical path and the total time taken to complete the project. (S marks) (© Hak Cipta Universit Teknolog! MARA. CONFIDENTIAL,CONFIDENTIAL, 4 APIJUN 2019/RES511 QUESTION 2 ‘A developer has plans to undertake either of these two (2) projects. Project A is a 30 storey office complex and project B is 40-storey office building and condominium tower. However due to uncertainty of economic globally and locally the expected cost and profit of each project are as follows: Option | Probable Cost | Chances | Probable Profit | Chances a, (RM) (RM) __| A ‘400M 7,000M 03 ‘520M [___ 500M 06 800M 0.1 ‘Option | Probable Cost | Chances | Probable Profit | Chances | —_(RM) [ (RM) B 600M | 06 1,200M 0.2 750M «| OO4 850M 05 700M 03 Based on the above information, answer the followings: ) Illustrate a decision tree to represent the above problem. (10 marks) b) Calculate EMV under uncertainty (12 marks) c) Choose the best option. (8 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknolog! MARA CONFIDENTIAL