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Independent company bought a land of $100,000$ sqm at a cost of SR $2,000$ per sqm$.$ The land will be used to build an office space with a total built up area $($BUA$)$ of $120,000$ sqm at a cost of SR $8,000$ per sqm of BUA. The land cost is paid out upfront and the development cost will be paid out over $4$ construction years $($Year $1-10\%,$ Year $2$ to $4-30\%$ each year$).$ Out of total BUA, $40\%$ will be leasable area that will generate revenue from Year $5$ at SR $4,000$ per sqm$.$ The EBITDA conversion is expected to be $55\%$ in first year of lease. All revenues and expenses $($both OPEX and CAPEX$)$ are expected to be received and paid in the same year. Assume $2\mathrm{.}5\%$ zakat on EBT and $10\%$ depreciation for capex. The CAPEX will be funded $40\%$ with bank loan and the remaining with equity. The bank will provide loan for a total duration of $14$ years with construction years as grace period. Interest during the construction period is exempted. The repayment for the total loan will start from year $5$ with $10$ equal annual installments. The interest rate is $5\%.$ The $10-$year treasury bills are trading at $3\%.$ Market risk premium is at $5\%$ and the beta for the company is at $1\mathrm{.}4.$ Assume perpetuity growth rate at $2\mathrm{.}5\%,$ annual inflation at $3\%$ p$.$a$,$ and annual revenue growth of $5\%.$

Please prepare:

Project valuation using DCF method $(15$ years $+$ Terminal Value$)$ and your recommendation to approve or reject the project, show:

a$.$ NPV

b$.$ IRR

c$.$ Nominal Payback period

d$.$ Peak funding

Balance Sheet

Income Statement

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