Subject category:
Finance, Accounting and Control
Published by:
Ivey Publishing
Version: 2017-03-27
Revision date: 3-May-2017
Length: 8 pages
Data source: Field research
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Abstract
The Percy Group is a diversified real estate development company. The president must decide whether to invest USD7.9 million to convert one of the company's apartment buildings into a retirement home. The company had not previously converted or operated a retirement home. He must evaluate industry trends and the expected cash flows necessary to determine whether the investment is expected to earn the company's cost of capital. He must also undertake sensitivity analysis and a qualitative evaluation.
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Abstract
The Percy Group is a diversified real estate development company. The president must decide whether to invest USD7.9 million to convert one of the company's apartment buildings into a retirement home. The company had not previously converted or operated a retirement home. He must evaluate industry trends and the expected cash flows necessary to determine whether the investment is expected to earn the company's cost of capital. He must also undertake sensitivity analysis and a qualitative evaluation.