Financial Analysis Report: Point Cook Residential Project Proposal

This report presents a financial feasibility study conducted for a Sub Division Residential Development Complex Project located in Point Cook, VIC, evaluating two proposals. The analysis, performed for an Investment Company, aims to determine the most financially viable option for the Managing Director. The study encompasses a detailed examination of both proposals, including cost analysis, Gantt charts, cash flow schedules, net income projections, and total development costs. The report employs financial tools such as NPV and IRR to compare the proposals. Proposal 1 emerges as the more economically feasible option, offering a higher profit margin for the investor, though the developer could benefit more from Proposal 2. The report also addresses potential risks and provides recommendations to the Managing Director, concluding that Proposal 1 is the most reasonable choice for investment. Key findings include the total cost calculations, net income projections, and the impact of different equity ratios. The report also calculates the initial yield, developer profit, and NPV, along with a ten-year cash flow analysis for both proposals.

Engineering Management

Letter to the Managing Director
23 October 2017
XXX
Dear Managing Director
It is our pleasure to inform you that calculating the proposals provided to us for the Sub Division
Residential Development Complex Project located at the outer suburb of Point Cook, VIC have
been done carefully.
For a clear vision the two proposals that are provided have been financially analyzed and
accomplished to understand which proposal is more feasible. Proposal 1 has confirmed to be
more economically feasible as the profit betters that of the proposal 2.
Through the term of this report this will turn out to be clear through our utilization of
investigation apparatuses intended to analyze the two choices.
For further information kindly contact me: XXX University,
Tel: XXX
Regards,
XXX

Executive Summary
This report clarifies the findings of the money related practicality ponder done in the investor’s
interest, executed by the budgetary advisor group. It noticed the key examinations between two
alternatives which propose the development of a Sub Division Residential Development
Complex Project located at the outer suburb of Point Cook, VIC. This contains an inside and out
investigation including however not restricted to a Gantt chart, yearly net income and
suggestions. We found that Proposal 1 was the better one than attempt for the financial specialist,
in any case, the designer would profit more noteworthy with Proposal 2. Overall the two
proposals are not cautious alternatives to hold for this specific undertaking.

Assumptions
 Land all sold over 18 months
 The expenses will be 30% of the gross revenue
 All properties 100% leased

Table of Contents
Introduction.............................................................................................................................................4
Aim..........................................................................................................................................................5
Outline Methodology..............................................................................................................................5
Part A.......................................................................................................................................................6
Part B.....................................................................................................................................................13
Part C.....................................................................................................................................................15
Part D.....................................................................................................................................................16
Part E.....................................................................................................................................................16
Part-G....................................................................................................................................................19
Recommendations.................................................................................................................................19
References............................................................................................................................................19

Introduction
As a section of this task, we have been designated as monetary specialists for an
Investment Company for which we should do a budgetary attainability examination for two
proposals to construct a Sub Division Residential Development Complex Project located at the
outer suburb of Point Cook, VIC and make suggestions to the Managing Director to legitimize
the money related feasibility. From these two Proposals, we should choose which alternative will
be better for the organization through contrasting perspectives, for example, costs, incomes, and
venture salary and different distributions. The Sub Division Residential Development Complex
Project consist of Aged care Accommodation, Medical center, Shopping center, Parks and
recreation facilities. Toward the finish of the examination, an informed proposal is made to the
Managing Director in regards to which alternative is the most reasonable choice. This report
additionally contains conceivable dangers which might be experienced through the advancement.
Aim
To convey a financial feasibility study for the proposed Sub Division Residential Development
Complex Project located at the outer suburb of Point Cook, VIC and make recommendations to
the Managing Director of the Investment Company regarding which proposal has the most
financial feasibility is the aim of the project.
Outline Methodology
To analyze a feasibility study the subsequent principles or procedure are essentially taken to
completely realize the two proposals approaching to provide the client with a better
understanding about what the project is. These procedure or principles include
 Computing the Sub Division Residential Development Complex Project located at the
outer suburb of Point Cook, VIC total cost.
 Estimate internal rate of return.
 Conclude the NPV.
 Manipulating the cash flow for the given period.
 The debt: equity ratio analysis.
 And provide a sensitive analysis along with risk analysis.
This report sets out the Sub Division Residential Development Complex Project located
at the outer suburb of Point Cook, VIC proposals for the construction phase. The key features of
the construction stage and the proposals are developed to diminish the impacts.
In this report, the development proposal for the project is defined. The total cost of the
construction completion as per the on 1st April 2017 is being calculated in Part-A, the net
income on the completion of the project is being identified and the total development cost, cost

of the project is done. From the two given proposal, the best suit proposal is found out and the
statement is provided in Part-C. The calculation is also done for the John Wiley is done in Part-
B. In Part-D the impacts of the different equity ratios are provided. All possible risk is been
identified in Part-E and the three risky areas are specified, spider graph is provided for a clear
definition
Part A
Answer
1.
To calculate the total cost for the Sub division department as per 1st April 2017 Excel
sheet is been used for the calculation (Kubba, 2010). The following steps are done
 An input table is setup in MS excel for option 1 sheet 1 is used
 The construction cost that given for 1st January 2017 is take as the current vale
and the calculation is done by using the formula

Total Cost for the Sub division department as per 1st April 2017
Figure 1 Total cost for Proposal 1

Figure 2 Total cost for Proposal 2
From the above figures the total cost for construction of proposal 1 and 2 are
$369,069,541.70and $489,970,536.13respectively. This proves proposal 1 has a lower saved
amount of $30,493,425 for the investor. For each proposal the total cost was obtained by
calculating the future value (FV) of each individual factor and then added to give us the total
cost as of April 1, 2017. The formula: FV= PV (1+i) n is used for find the future value.
Construction Time

Figure 3 construction time for Proposal 1

Figure 4 construction time for Proposal 2
2. Gantt Chart
A development plan has a set of documents that is used to set out the local authority's
policies and proposals for the developing and using the land in their area. Development plan
details the complete strategy of the council and makes for the suitable planning and ecological
development of an area and generally it consists of a written statement and accompanied with
maps. The broad aims of council on topics like infrastructure, housing, community facilities that
will be strengthened by more detailed objectives, procedures and policies are included in the
plan.
The main statement of the public planning policies and objectives are provided by the
development plan. The procedures, policies and objectives are serious in determining the suitable
location and form of different categories of development because the development plan is one of
the issues in contradiction of which planning applications are evaluated. For the development
plan work breakdown structure is essential to achieve this Gantt charts are used. Gantt charts are

used for tracking project schedules. Additional information about the various tasks or phases of
the project, for example how far each task has been progressed, what resources are used for each
task, how the tasks are relate to each other and so on can be able to show with the help of the
Gantt chart.
Figure 5 Gantt chart for Proposal 1
Figure 6 Gantt chart for Proposal 2
3. Cash Flow Schedule
A cash flow schedule is a most significant financial statements for a project or business.
It can be as modest as a one page analysis or it may include numerous schedules that nourish
information for the project proposal. Credits are considered as the cash inflow and withdrawals
are considered the cash outflows.