Assignment #3: Data Tables/ Scenarios & Optimisation
Your two managers have reconciled their differences and they have learned a valuable lesson from your reports: It’s rarely a good idea to base decisions only on what you’d like the world to be. Now they want you to give a much more realistic assessment of the viability of your suburb, and related suburbs, as areas for buying houses and then building and selling apartments.
Managers have noted that, even after accounting for inflation, prices for both houses and apartments in your suburb have fluctuated somewhat. They also know that the cost of building can vary depending on the nature of the land, local council requirements, labour availability and more.
Task #1: DataTables/ Scenarios
Take into account variability in price fluctuations for both Strata and Non-Strata properties, and variability in construction costs. Use Data Tables and/or Scenario Manager in Excel to estimate Return on Investment and Nett Profit from different combinations of Strata-property prices, Apartment construction costs, and Number of apartments.
Submission
Submit a short report showing your results and expected ROI and Nett Profit for all scenarios. Include a summary of any assumptions made.
Notes:
• Real-estate economists agree that house (Non-strata) prices are likely to remain stable in the next few months while we make our decisions.
• Real-estate economists are not sure what the effects of the recent Banking scandals might be. They warn that prices for apartments (Strata) could drop by as much as 20%, in real terms, or they could remain the same, or they could jump by as much as 15% within our building and selling time-frame.
• Construction costs may vary in the range of 40% 50% and 60% of the expected (current) selling price of an apartment.
• Number of apartments can be in the range of two to a maximum of eight for one house block.
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