INVESTMENT ANALYSIS
From a financial and economic point of view, investment can be defined as a long-term commitment of economic resources made with the objective of producing and obtaining net gains exceeding the total initial investment in the future. The main aspect of this commitment is the transformation of the financial resources including the investor’s own and borrowed funds into productive assets.
The aim in the construction of Metu Alumni Hotel is to generate funds from this investment and use them in current and future activities of Metu Alumni Center. If the investment of this hotel is not feasible, rather than expected gains Alumni Center can incur big loses. To prevent this undesired situation a careful financial analysis in the content of the feasibility study should be done. This analysis will provide Metu Alumni Center with the information required to decide whether to undertake an investment, and whether and how to finance this project.
In this financial analysis; basic criteria for investment decisions, pricing for investment inputs and outputs, the project horizon etc. will be discussed and methods of investment appraisal like discounting methods, financing analysis will be done.
Total Investment Costs:

THE INVESTMENT COSTS are the costs required for constructing and equipping the investment project. These equipment include:
* Land costs : Since the land where the hotel will be constructed is owned by Alumni Association there is no cost incurred for the hotel land.
* Site preparation costs, building structure and civil engineering costs: The hotel will be constructed by Tepe Prefabricated Building Industries & Trade Co. Inc. When a project is given to Tepe Co. they first modify the given project according to their standards and advise the modified one. If the investment owner accepts it they start the project first by preparation of the site. After the site is prepared they construct the hotel by assembling the prefabric walls. They also construct the electricity, telephone, water, heating, ventilation and sewer system of the hotel. In other words they construct the whole hotel accept the moving furniture in the hotel.
Tepe Prefabricated Building Industries & Trade Co. Inc. demands a unit price of 550$ per m2 for all of these jobs.
Floor area of the hotel = 946 m2
Number of floors = 2
m2 cost = 550$
Total site preparation, building structure, and civil engineering costs of the hotel can be found as:
946*2*550=1040600$
* Equipment cost : The equipment cost of the hotel involves the costs of the furniture, electronic devises and other equipment in the hotel. These expected costs for the equipment and furniture in each part of the hotel is given below:
Room: 988$ / room*40 rooms=39520$ (for room cost details follow this link)
Café bar: 1500$
Administration office: 1000$
Meeting room: 700$
Internet room: 5200$
Storage room: 400$
Laundry and ironing: 1500$
Lobby: 4000$
Coridors:500$
Total equipment cost of the hotel: 54320$

As a result Total Investment cost of the hotel is: 1040600$+54520$=1095120$
 
 

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