A commercial building design cost $91/square-foot to construct eight years ago (

Question

A commercial building design cost $91/square-foot to construct eight years ago (for an 83,000-square-foot building). This construction cost has increased 5.3% per year since then. Presently, your company is considering construction of a 125,000-square-foot building of the same design. The cost capacity factor is X = 0.92. In addition, it is estimated that working capital will be 5% of construction costs, and that project management. engineering services, and overhead will be 4.2%, 9%, and 31%, respectively, of construction costs. Also, it is estimated that annual expenses in the first year ofoperation will be $6/square foot, and these are estimated to increase 5.65% per year thereafter. The future general inflation rate is estimated to be 7.69% per year, and the market-based MARRs 12% per year (m) Click the icon to view the interest and annuity table for discrete compounding when i-12% per year a. What is the estimated capital investment for the 125,000-square-foot building? The estimated capital investment is S million (Round to two decimal places) More Info Discrete Compounding: 1-12% Single Payment Uniform Series Compound Amount Factor To FindF Given A FIA 1.0000 2.1200 3.3744 4.7793 6.3528 8.1152 10.0890 12.2997 14.7757 17.5487 Sinking Capital Recovery Factor To Find A Given P A/P 1.1200 0.5917 Compound Amount Present Present Worth Factor To Find P Given A P/A 0.8929 1.6901 2.4018 3.0373 3.6048 4.1114 4.5638 4.9676 5.3282 5.6502 Factor To Find A Given F A/F 1.0000 0.4717 0.2963 0.2092 0.1574 0.1232 0.0991 0.0813 0.0677 0.0570 Factor Worth Factor To FindF To Find P Given P Given F/P 1.1200 1.2544 1.4049 1.5735 1.7623 1.9738 2.2107 2.4760 2.7731 3.1058 P/F 0.8929 0.7972 0.4163 0.3292 0.6355 0.5674 0.5066 0.4523 0.4039 0.3606 0.3220 4 0.2774 0.2432 0.2191 0.2013 0.1877 0.1770

Explanation / Answer

Cost of 80,000 SFT building:

= $91×83,000

= $7,553,000

Estimated cost of 125,000 SFT building:

= $7,553,000×[(125,000÷83,000)^0.92]×(1+5.30%)^8

= $16,639,942.4972

Total estimated cost:

= $16,639,942.4972×(1+5%+4.20%+9%+31%)

= $24.83 million

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