Commercial Property Development - Determining Selling Prices for Business Operations

Understanding Prosperity Land Ltd (PLL)

Question 1Prosperity Land Ltd (PLL) is a commercial property developer. It designs and builds malls for customers to operate their businesses. Instead of renting the space to the customers, PLL sells the units to them under Strata Title. PLL needs to determine the right selling prices which allows it to maximise profit while attracting many buyers.This assignment requires you to practise principles of correct spreadsheet construction and design to help PLL to improve its decision making to meet its business challenges. Note: you must follow the information given in this TMA case and ignore other rules and regulations concerning property sales and bank loans. (a)Mall Traffic, measured by the number of visitors-per-day, is often used as a variable to predict the occupants’ business viability. PLL has collected the following information on mall traffic and selling price per square meter of four existing malls.Data for Mall Traffic and Selling PriceMall Traffic (visitors per day)15,00010,0006,0004,000Selling Price per square meter $14,000$11,000$7,200$3,600Note: The Selling Price is valid only for units with areas between 50 to 200 square meters.Record how Selling Price changes with Mall Traffic by creating a scatter plot with a Trend Line and equation shown, assuming a linear relationship between the variables.PLL has completed building three properties with estimated mall traffic as shown below. The selling price has yet to be decided. MallCity PointBishan CentreTuas SquareMall Traffic (visitors per day)12,0009,0006,000Selling price per square meterUsing the TRENDLINE that you have computed above, compose a spreadsheet model that will allow PLL to determine the Selling Price for each of the three properties by using Excel function(s).

(b)To attract customers to purchase larger units, PLL provides discounts as shown below:Floor AreaDiscount (% of Selling Price)Less than 100 sq. meters0%100 to less than 150 sq. meters5%150 sq. meters or more10%For example, a unit with 180 square meters will have the discount = (100 sq. meters * 0% of selling price per sq. meter) + (50 sq. meters * 5% of selling price per sq. meter) + (30 sq. meter * 10% of selling price per sq. meter)The data is only valid for the units with floor area between 50 square meters (the smallest unit) to 200 square meters (the largest unit). PLL requires the customers to pay at least 10% of the Selling Price as down payment. It has tied up with Alliance Business Bank (ABB) to provide loans to customers for the remaining amount. ABB allows the customers to re-pay the loan in equal instalments (with interest) at the end of each month for up to 20 years.Construct a spreadsheet model as shown below that will help PLL’s customers to calculate the monthly payment to the bank by entering data into the shaded cells. All non-shaded cells must contain Excel formulae without being simply linked to another cell.Note: To illustrate your skill in Excel Modelling with good practices, you shall document any use of good Excel functions or features to make your model resilient to data entry errors