economic project analysis - mt. pleasant corporate center

8/13/2019 Economic Project Analysis - Mt. Pleasant Corporate Center

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Income and Expenses

The decisions made for the income and expenses for the Mount Pleasant

Corporate Center were based off of the information in the project description and

the assumptions located in the previous section.

Using the assumptions above for the lawn maintenance, the total lawn

care maintenance will amount to $5,000 per year. This includes mowing the

grass around the lots and maintaining the landscape. The total lawn

maintenance was found by multiplying 8 acres times $50 per acre times 12.

The total road maintenance will amount to $4,000 per year. This includes

fixing any problems with the roadway and snow plowing costs. The total

maintenance cost for the first 3 years of the project was calculated to be $32,500

per year. This cost includes lawn maintenance, insurance, and marketing costs.

After the third year the total maintenance costs increase to $36,500 per year.

The slight increase in maintenance cost is due to the road maintenance being

added. As the lots are sold the total maintenance costs decrease by $1,000 per

year.

The low interest loan needed to fund the project was calculated to be

$4,490,000. The 2.5% interest rate used for the loan was decided to be the

prime interest rate for banks. The interest rate that was used for everything

outside of the loan was decided to be 5%. This interest rate was used for the

EUAC and helped to determine the total loan that was needed for the project. All


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of the other expenses listed in the project description were planned out according

to the payment breakdown. The annual loan payment was calculated to be

$630,000. The first loan payment and initial construction costs will come from the

grant and company money. This payment will span 8 years, it will start when the

land is initially purchased and continue until the last lot is sold.


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Loan Value

Annual Loan Payment


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Lot Prices

Scenario 1

Scenario 2


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Scenario 1 - Developer Breaks Even

Scenario 2 - Developer makes 10% prot


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economic project analysis - mt. pleasant corporate center

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