Operation
posted by Nilu
Parsa Real Estate is a company that buys and rents real estate. The company is looking into buying an office building for $1M.Thebuilding has 10,000 square feet of rentable office space.
The company analysts predict that they can rent the office space for $6 per square foot per month, but demand is a function of price in the following way:
%Occupied=2L0.2*Rent
(Rentisindollarspersquarefootpermonth.Also,at$6.00,Oscarthinkshecanfillabout80% Of the office space.)
The building needs to be maintained (security, insurance, maintenance, etc.), which costs $10,000 per month regardless of occupancy. Also, there is a variable cost of $2 per month for each square foot occupied.
Define there turn on invested capitals the ratio of the profits (PERYEAR)and the invested capital. You can drawan ROIC tree in the same way that we drew a KPI tree in class.Simply have the ROIC as“the root”of the tree instead of profits. Then answer the following questions.
Question 3
HINT: ROIC = (revenues  costs) / invested capital. Use occupancy rate to determine revenues; use fixed and variable costs to determine costs
Question 4
New ROIC (in decimal form):
ROIC = (revenues  costs) / invested capital

PsyDAG
Indicate your specific subject in the "School Subject" box, so those with expertise in the area will respond to the question.
Respond to this Question
Similar Questions

math
vivian sold her home through a real estate company. Vivial received $140,000 after she paid the real estate agent a 6% commission. What was the selling price of her home? 
optimization calculus
a real estate office manages 50 apartments in downtown building . when the rent is 900$ per month, all the units are occupied. for every 25$ increase in rent, one unit becomes vacant. on average , all units require 75$ in maintenance … 
business
A company has the following alternatives on some real estate that it needs for its new plant. It can lease the facility for $10,000 a month for 15 years, or it can buy the facility now for $800,000. The company’s weighted average … 
business
A company has the following alternatives on some real estate that it needs for its new plant. It can lease the facility for $10,000 a month for 15 years, or it can buy the facility now for $800,000. The company’s weighted average … 
statistics
One method for estimating the availability of office space in large cities is to conduct a random sample of offices, and calculate the proportion of offices currently being used. Suppose that real estate agents believe that of all … 
ACCOUNTING
On March 1, 2012, Enrique Company acquired real estate, on which it planned to construct a small office building, by paying $90,504 in cash. An old warehouse on the property was demolished at a cost of $7,646; the salvaged materials … 
personal finance
If you want a riskproof real estate investment, invest in: A. real estate investment trusts. B. real estate limited partnerships. C. participation certificates (PCs). D. real estate syndicates. 
Managarial Finance
"Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. The company has shown a profit every … 
Calculus
A real estate office manages 50 apartments in a downtown building. When the rent is $900 per month, all the units are occupied. For every $25 increase in rent, one unit becomes vacant. On average, all units require $75 in maintenance … 
jill
A real estate development company is planning to bulid five homes, each costing $125,000, in 2.5years. the bank pays 6% interest compound semiannually. how much should the company invest now to sufficemt funds to build homes in the …