Project Investment Analysis

Running head: PROJECT INVESTMENT ANALYSIS
Project Investment Analysis
Name of the Student:
Name of the University:
Author’s Note:

1PROJECT INVESTMENT ANALYSIS
Serial Particulars Yes No
1 Development Cost Calculations Yes -
2 Development Plan Report Yes -
3 Cash Flow Schedule/Outlay Yes -
4 Net Income Evaluation Yes -
5 Total Development Cost of the Project Yes -
6 Project Finance Cost Yes -
7 Cost Escalation Yes -
8 Yield on Project Yes -
9 Forecasting Revenue for 10 years Yes -
10 Project Sale Price Yes -
11 Original Developers Profit/Loss Yes -
12 N.P.V for John Willey Pty Ltd Yes -
13 Profit/Loss Evaluation for John Willey Pvt Ltd on Exit Route Yes -
14 Impact of Changing Debt: Equity Ratio Yes -
15 Risk Evaluation for City Highrise Development Project Yes -
16 Sensitivity Analysis of Project Yes -
Assignment Checklist

2PROJECT INVESTMENT ANALYSIS
668 George Street,
Melbourne, VIC 3000
Telephone [phone]
www.mckenzieandassociate.com.au
28th September 2018
Mr Con Pewter
The Managing Director
City Highrise Complex Development Option.
Level 6, 510 King William Street,
Adelaide SA 5000
Dear Mr Pewter,
Sir, we would like to inform you that the financial evaluation for the project City Highrise
Development Complex is evaluated. The financial analysis of the project gave us a brief idea
about the prospect and the overview of the project. The financial analysis helped us and gave
an overview and helped us forecast the project revenue, costs and other crucial factors. There
were certain factors and assumptions taken for evaluation and analysis taken which is
discussed in brief.
The key aspects including the development costs, project cost, revenue analysis, yield
on project and risk analysis was done to overview and know whether the project is viable and

3PROJECT INVESTMENT ANALYSIS
to check financial sustainability of the investment. The Project results shows that external
factors like cost escalation and project finance costs has hampered the revenue of the project
and the net return generated from the project is not feasible.
The Exit route for the project was determined on the basis of project being sold to
John Wiley Pty Ltd on completion and this was also taken into account while assessing the
financial feasibility of the investment project. Risk analysis in the project acted as an aid in
the project which helped us determine the key areas to focus and the factors through which
the project was most sensitive.
In case if you have any more concerns or query to follow up, please get in touch with us
through our registered official email id or contact numbers.
Yours Sincerely
Financial Consultant
McKenzie and Associates
Enclosure: Investment Advisory
Cc: Maria McKenzie

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Executive Summary
The aim of the Project Investment Analysis is to ascertain and evaluate the financial analysis
of the City High-rise Complex Development Option. The topic evaluates about the real estate
development of the assigned topic with the help of different approaches of valuation. The
analysis of the project includes the breakdown of the development cost, cash flow analysis.
The Income approach and the cost approach of valuation of private real estate were the key
factors used in the assignment. The different financing method and the applicability of the
same on the project s discussed. The possible risks and the key risk areas were ascertained
using the sensitivity and risk analysis of the project. The key recommendation for the project
would be to do a financial analysis using different assumptions of the project’s operating
costs, revenue the same will generate and the key factors involved. The project was divided
into four phase where each phase covers the important part of the project development and
the cost related to each item.

5PROJECT INVESTMENT ANALYSIS
Table of Contents
Introduction................................................................................................................................6
Assumptions...............................................................................................................................6
Methodology..............................................................................................................................8
Spreadsheet Computations & Graph/Charts..............................................................................8
Estimation of Net Income and Revenue Analysis................................................................11
Total development cost, Project financing cost and Cost of Escalation..............................12
Project Development Yield on completion of the project....................................................13
Discussion & Recommendations.............................................................................................13
Risks and Sensitivity Analysis.............................................................................................13
Risk Evaluation of City Highrise Development Project......................................................14
Sensitivity Analysis..............................................................................................................14
Exit Route Evaluation..........................................................................................................15
Acquisition Cost...............................................................................................................15
Developers Profit/Loss.........................................................................................................16
Annual Cash Flow............................................................................................................16
Net Present Value.............................................................................................................16
Profit/Net Present Value and I.R.R......................................................................................17
Impact of Changing Debt and Equity Ratio.........................................................................17
Conclusion................................................................................................................................17
Reference..................................................................................................................................18
Appendix..................................................................................................................................21