CEIE370 The Mount Hope Project Developing an Economic Analysis

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Assume you are Claire and are trying to determine if the Mount Hope shopping mall is a good investment of your $6.5 million inheritance, using a 20-year period. Assume operation of the facility begins in year 2 and the equity is utilized in year 1.

Determine the:

  • Gross annual revenue
  • Annual Maintenance Costs
  • Net Annual Revenue
  • Estimated Annual Debt Service
  • Estimated Annual Profit
  • Net Present Value of Claire’s investment, if the discount rate = 9%
  • Internal Rate of Return for the project investment

Prepare a memo summarizing your findings from above and make a firm recommendation as to whether the project is a sound investment.