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Acquisition Costs of Realty

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E10-1 (Acquisition Costs of Realty) the following expenditures and receipts are related to land, land improvements, and buildings acquired for use in a business enterprise. The receipts are enclosed in parentheses.
(a) Money borrowed to pay building contractor (signed a note) $(275,000)
(b) Payment for construction from note proceeds 275,000
(c) Cost of land fill and clearing 8,000
(d) Delinquent real estate taxes on property assumed by purchaser 7,000
(e) Premium on 6-month insurance policy during construction 6,000
(f) Refund of 1-month insurance premium because construction completed early (1,000)
(g) Architect’s fee on building 22,000
(h) Cost of real estate purchased as a plant site (land $200,000 and building $50,000) 250,000
(i) Commission fee paid to real estate agency 9,000
(j) Installation of fences around property 4,000
(k) Cost of razing and removing building 11,000
(l) Proceeds from salvage of demolished building (5,000)
(m) Interest paid during construction on money borrowed for construction 13,000
(n) Cost of parking lots and driveways 19,000
(o) Cost of trees and shrubbery planted (permanent in nature) 14,000
(p) Excavation costs for new building 3,000

Instructions
Identify each item by letter and list the items in columnar form, using the headings shown below. All receipt amounts should be reported in parentheses. For any amounts entered in the Other Accounts column also indicate the account title.
Other Item Land Improvements Building Accounts

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Solution Summary

The solution explains the various acquisition costs as part of Land, Land Improvements or Building Accounts

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Need to calculate the cost of equity, wacc, and unleavered cost of equity for senior housing Properties trust. I have downloaded the financial statements for this company.

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Unit One Individual Project: Financial Analysis Introduction
FIN620-1101C

Senior Housing Properties Trust
Consolidated Statement of Income
(In thousands, Except Per Share Amounts)

Year Ended December 31,
2009 2008 2007
Revenues
Rental income 296,777 233,210 185,952
Interest and other income 1,003 2,327 2,070
Total Revenues 297,780 235,537 188,022

Expenses:
Property operating expenses 14,273 2,792 -
Interest 56,404 40,154 37,755
Depreciation 78,583 60,831 47,384
Acquisition Costs 3,327 - -
General and Administrative 20,345 17,136 14,154
Impairment of assets 15,530 8,379 1,400
Loss on early extinguishment of debt - - 2,026
Total Expenses 188,462 129,292 102,719

Income before gain of sale of properties 109,318 106,245 85,303
Gain on sale of properties 397 266 -
Net Income: 109,715 106,511 85,303

Weighted average shares outstanding 121,863 105,153 83,168

Basic and diluted earnings per share:
Income before gain on sale of properties $0.90 1.011 1.03
Gain on sales of properties - - -
Net Income $0.90 1.011 1.03

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