Time Value of Money

Time Value of Money

The time value of money is money's potential to grow in value over time and this growth is associated with the expected return form ‘investment’ of money. Because of this potential, money that's available in the present is considered more valuable than the same amount in the future. For example, if you were given $100 today and invested it at an annual rate of only 1%, it could be worth $101 at the end of one year, which is more than you'd have if you received $100 at that point. After all, you should receive some compensation for foregoing spending. If you invest 1 dollar for one year at a 6% annual interest rate you can say that the future value of the dollar is $1.06 given a 6% interest rate and a one-year period. It follows that the present value of the $1.06 you expect to receive in one year is only $1.

The time value of money can be used to calculate how much you need to invest now to meet a certain future goal.

Inflation has the reverse effect on the time value of money. Because of the constant decline in the purchasing power of money, an uninvested dollar is worth more in the present than the same uninvested dollar will be in the future.

Time Value of Money (TVM) is an important concept in financial management. It can be used to compare investment alternatives and to solve problems involving loans, mortgages, leases, savings, and annuities.

A key concept of TVM is that a single sum of money or a series of equal, evenly-spaced payments or receipts promised in the future can be converted to an equivalent value today.  Conversely, you can determine the value to which a single sum or a series of future payments will grow to at some future date.

Calculations

You can calculate the fifth value if you are given any four of: Interest Rate, Number of Periods, Payments, Present Value, and Future Value.  Each of these factors is very briefly defined in the right-hand column below.  The left column has references to more detailed explanations, formulas, and examples.

Interest ·   Simple ·   Compound	Interest is a charge for borrowing money, usually stated as a percentage of the amount borrowed over a specific period of time.   Simple interest is computed only on the original amount borrowed. It is the return on that principal for one time period.  In contrast, compound interest is calculated each period on the original amount borrowed plus all unpaid interest accumulated to date.  Compound interest is always assumed in TVM problems.
Number of Periods	Periods are evenly-spaced intervals of time. They are intentionally not stated in years since each interval must correspond to a compounding period for a single amount or a payment period for an annuity.
Payments	Payments are a series of equal, evenly-spaced cash flows.  In TVM applications, payments must represent all outflows (negative amount) or all inflows (positive amount).
Present Value ·   Single Amount ·   Annuity	Present Value is an amount today that is equivalent to a future payment, or series of payments, that has been discounted by an appropriate interest rate.  The future amount can be a single sum that will be received at the end of the last period, as a series of equally-spaced payments (an annuity), or both.  Since money has time value, the present value of a promised future amount is worth less the longer you have to wait to receive it.
Future Value ·   Single Amount ·   Annuity	Future Value is the amount of money that an investment with a fixed, compounded interest rate will grow to by some future date. The investment can be a single sum deposited at the beginning of the first period, a series of equally-spaced payments (an annuity), or both.  Since money has time value, we naturally expect the future value to be greater than the present value. The difference between the two depends on the number of compounding periods involved and the going interest rate.
Loan Amortization	A method for repaying a loan in equal installments. Part of each payment goes toward interest and any remainder is used to reduce the principal. As the balance of the loan is gradually reduced, a progressively larger portion of each payment goes toward reducing principal.
Cash Flow Diagram	A cash flow diagram is a picture of a financial problem that shows all cash inflows and outflows along a time line.  It can help you to visualize a problem and to determine if it can be solved by TVM methods.

Investing For a Single Period:

Suppose you invest $100 in a savings account that pays 10 percent interest per year. How much will you have in one year? You will have $110. This $110 is equal to your original principal of $100 plus $10 in interest. We say that $110 is the future value of $100 invested for one year at 10 percent, meaning that $100 today is worth $110 in one year, given that the interest rate is 10 percent.

In general, if you invest for one period at an interest rate r, your investment will grow to (1 + r) per dollar invested. In our example, r is 10 percent, so your investment grows to 1 + .10 = 1.10 dollars per dollar invested. You invested $100 in this case, so you ended up with $100 x 1.10 = $110.

Investing For More Than One Period:

Consider your $100 investment that has now grown to $110. If you keep that money in the bank, what will you have after two years, assuming the interest rate remains the same?

You will earn $110 x .10 = $11 in interest after the second year, making a total of $100 + $11 = $121. This $121 is the future value of $100 in two years at 10 percent.

Another way of looking at it is that one year from now, you are effectively investing $110 at 10 percent for a year. This is a single-period problem, so you will end up with $1.10 for every dollar invested, or $110 x 1.1 = $121 total.

The process of leaving the initial investment plus any accumulated interest in a bank for more than one period is reinvesting the interest. This process is called compounding. Compounding the interest means earning interest on interest so we call the result compound interest. With simple interest, the interest is not reinvested, so interest is earned each period is on the original principal only.

Solve the problems:

1. Suppose you locate a two-year investment that pays 14 percent per year. If you invest $325, how much will you have at the end of two years? How much of this is simple interest? How much is compound interest?
2. How many years a sum of money would take to double itself if the interest rate applied is 10% p.a compounded annually?

All of the standard calculations for time value money derive from the most basic algebraic expression for the present value of a future sum. The same rate of interest r used to get future value from a present value can be the ‘discount rate’ can be used to convert the future value into present value. For example,

A sum of FV to be received in one year is FV = PV (1 + r)ⁿ , where r is the rate of interest and n is the number of interest periods (if interest is calculated quarterly, there will be 4 periods in a year and if annually, there is 1 period in a year).

And if we have the FV, the present value can be derived as PV = ^FV/_{(1 + r)}ⁿ , where (1 + r) is the discount factor and we get PV by discounting the FV. Also, PV is the value at time = 0 and FV is the value at time = n

The cumulative present value of future cash flows can be calculated by summing the contributions of FV_t, the value of cash flow at time=t

Note that this series can be summed for a given value of n, or when n is ∞. This is a very general formula, which leads to several important special cases given below.

Present value of an annuity (immediate) for n payment periods

In this case the cash flow values remain the same throughout the n periods. The present value of an annuity (PVA) formula has four variables, each of which can be solved for:

1. PV(A) is the value of the annuity at time=0
2. A is the value of the individual payments in each compounding period
3. i equals the interest rate that would be compounded for each period of time
4. n is the number of payment periods.

To get the PV of an annuity due, multiply the above equation by (1 + i).

Present value of a growing annuity

In this case each cash flow grows by a factor of (1+g). Similar to the formula for an annuity, the present value of a growing annuity (PVGA) uses the same variables with the addition of g as the rate of growth of the annuity (A is the annuity payment in the first period). This is a calculation that is rarely provided for on financial calculators.

Where i ≠ g :

To get the PV of a growing annuity due, multiply the above equation by (1 + i).

Where i = g :

Present value of a perpetuity

When n → ∞, the PV of a perpetuity (a perpetual annuity) formula becomes simple division.

When this is an increasing perpetuity, this i becomes i’ 1+i’=(1+i)/(1+g) i’=(i-g)/(1+g)

so A/i’ = A x (1+g)/(i-g) not (A/(i-g))

Present value of a growing perpetuity

When the perpetual annuity payment grows at a fixed rate (g) the value is theoretically determined according to the following formula. In practice, there are few securities with precisely these characteristics, and the application of this valuation approach is subject to various qualifications and modifications. Most importantly, it is rare to find a growing perpetual annuity with fixed rates of growth and true perpetual cash flow generation. Despite these qualifications, the general approach may be used in valuations of real estate, equities, and other assets.

This is the well known Gordon Growth model used for stock valuation.

Future value of a present sum

The future value (FV) formula is similar and uses the same variables.

Future value of an annuity (immediate)

The future value of an annuity (FVA) formula has four variables, each of which can be solved for:

1. FV(A) is the value of the annuity at time = n
2. A is the value of the individual payments in each compounding period
3. i is the interest rate that would be compounded for each period of time
4. n is the number of payment periods

To get the FV of an annuity due, multiply the above equation by (1 + i).

Future value of a growing annuity

The future value of a growing annuity (FVA) formula has five variables, each of which can be solved for:

Where i ≠ g :

Where i = g :

1. FV(A) is the value of the annuity at time = n
2. A is the value of initial payment at time 0
3. i is the interest rate that would be compounded for each period of time
4. g is the growing rate that would be compounded for each period of time
5. n is the number of payment periods

Derivations

Annuity derivation

The formula for the present value of a regular stream of future payments (an annuity) is derived from a sum of the formula for future value of a single future payment, as below, where C is the payment amount and n the period.

A single payment C at future time m has the following future value at future time n:

Summing over all payments from time 1 to time n, then reversing the order of terms and substituting k = n − m:

Note that this is a geometric series, with the initial value being a = C, the multiplicative factor being 1 + i, with n terms. Applying the formula for geometric series, we get

The present value of the annuity (PVA) is obtained by simply dividing by (1 + i)ⁿ:

---

Another simple and intuitive way to derive the future value of an annuity is to consider an endowment, whose interest is paid as the annuity, and whose principal remains constant. The principal of this hypothetical endowment can be computed as that whose interest equals the annuity payment amount:

Principal = C/i + goal

Note that no money enters or leaves the combined system of endowment principal + accumulated annuity payments, and thus the future value of this system can be computed simply via the future value formula:

FV = PV(1 + i)ⁿ

Initially, before any payments, the present value of the system is just the endowment principal (PV = C / i). At the end, the future value is the endowment principal (which is the same) plus the future value of the total annuity payments (FV = C / i + FVA). Plugging this back into the equation:

Perpetuity derivation

Without showing the formal derivation here, the perpetuity formula is derived from the annuity formula. Specifically, the term:

can be seen to approach the value of 1 as n grows larger. At infinity, it is equal to 1,

 leaving    as the only term remaining.

Examples

Example 1: Present value

One hundred euros to be paid 1 year from now, where the expected rate of return is 5% per year, is worth in today's money:

So the present value of €100 one year from now at 5% is €95.23.

Example 2: Present value of an annuity — solving for the payment amount

Consider a 10 year mortgage where the principal amount P is $200,000 and the annual interest rate is 6%.

The number of monthly payments is

and the monthly interest rate is

 

The annuity formula for (A/P) calculates the monthly payment:

Example 3: Solving for the period needed to double money

Consider a deposit of $100 placed at 10% (annual). How many years are needed for the value of the deposit to double to $200?

Using the algrebraic identity that if:

Then  

The present value formula can be rearranged such that:

(years)

This same method can be used to determine the length of time needed to increase a deposit to any particular sum, as long as the interest rate is known. For the period of time needed to double an investment, the Rule of 72 is a useful shortcut that gives a reasonable approximation of the period needed.

Example 4: What return is needed to double money?

Similarly, the present value formula can be rearranged to determine what rate of return is needed to accumulate a given amount from an investment. For example, $100 is invested today and $200 return is expected in five years; what rate of return (interest rate) does this represent?

The present value formula restated in terms of the interest rate is:

see also Rule of 72

Example 5: Calculate the value of a regular savings deposit in the future.

To calculate the future value of a stream of savings deposit in the future requires two steps, or, alternatively, combining the two steps into one large formula. First, calculate the present value of a stream of deposits of $1,000 every year for 20 years earning 7% interest:

This does not sound like very much, but remember - this is future money discounted back to its value today; it is understandably lower. To calculate the future value (at the end of the twenty-year period):

These steps can be combined into a single formula:

Example 6: Price/earnings (P/E) ratio

It is often mentioned that perpetuities, or securities with an indefinitely long maturity, are rare or unrealistic, and particularly those with a growing payment. In fact, many types of assets have characteristics that are similar to perpetuities. Examples might include income-oriented real estate, preferred shares, and even most forms of publicly-traded stocks. Frequently, the terminology may be slightly different, but are based on the fundamentals of time value of money calculations. The application of this methodology is subject to various qualifications or modifications, such as the Gordon growth model.

For example, stocks are commonly noted as trading at a certain P/E ratio. The P/E ratio is easily recognized as a variation on the perpetuity or growing perpetuity formulae - save that the P/E ratio is usually cited as the inverse of the "rate" in the perpetuity formula.

If we substitute for the time being: the price of the stock for the present value; the earnings per share of the stock for the cash annuity; and, the discount rate of the stock for the interest rate, we can see that:

And in fact, the P/E ratio is analogous to the inverse of the interest rate (or discount rate).

Of course, stocks may have increasing earnings. The formulation above does not allow for growth in earnings, but to incorporate growth, the formula can be restated as follows:

If we wish to determine the implied rate of growth (if we are given the discount rate), we may solve for g:

Time value of money formulas with continuous compounding

Rates are sometimes converted into the continuous compound interest rate equivalent because the continuous equivalent is more convenient (for example, more easily differentiated). Each of the formulæ above may be restated in their continuous equivalents. For example, the present value at time 0 of a future payment at time t can be restated in the following way, where e is the base of the natural logarithm and r is the continuously compounded rate:

See below for formulaic equivalents of the time value of money formulæ with continuous compounding.

Present value of an annuity

Present value of a perpetuity

Present value of a growing annuity

Present value of a growing perpetuity

Present value of an annuity with continuous payments

Option Time value

In finance, the value of an option consists of two components, its intrinsic value and its time value. Time value is simply the difference between option value and intrinsic value. Time value is also known as theta, extrinsic value, or instrumental value.

Intrinsic value

Option Value

Intrinsic value is the greater of zero and the difference between the exercise price of the option (strike price, K) and the current value of the underlying instrument (spot price, S); see formulae below. If the option does not have positive monetary value, it is referred to as out-the-money. If an option is out-the-money at expiration, its holder will simply "abandon the option" and it will expire worthless. Because the option owner will never choose to lose money by exercising, an option will never have a value less than zero.

For a call option: value = Max [ (S – K), 0 ]

For a put option: value = Max [ (K – S), 0 ]

As seen on the graph, the call option's intrinsic value begins when the underlying asset's spot price exceeds the option's strike price.

Option value

Option value (i.e. price) is found via a formula such as Black-Scholes or using a numerical method such as the Binomial model. This price will reflect the "likelihood" of the option finishing "in-the-money". For an out-the-money option, the further in the future the expiration date - i.e. the longer the time to exercise - the higher the chance of this occurring, and thus the higher the option price; for an in-the-money option the chance in the money decreases; however the fact that the option cannot have negative value also works in the owner's favor. The sensitivity of the option value to the amount of time to expiry is known as the option's "theta"; see The Greeks. The option value will never be lower than its intrinsic value.

As seen on the graph, the full call option value (intrinsic and time value) is the red line.

Time value

Time value is, as above, the difference between option value and intrinsic value, i.e.

Time Value = Option Value - Intrinsic Value.

More specifically, an option's time value captures the possibility, however remote, that the option may increase in value due to volatility in the underlying asset. Numerically, this value depends on the time until the expiration date and the volatility of the underlying instrument's price. The time value of an option is always positive and declines exponentially with time, reaching zero at the expiration date. At expiration, where the option value is simply its intrinsic value, time value is zero. Prior to expiration, the change in time value with time is non-linear, being a function of the option price.

Discounting

Discounting is a financial mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee. Essentially, the party that owes money in the present purchases the right to delay the payment until some future date. The discount, or charge, is simply the difference between the original amount owed in the present and the amount that has to be paid in the future to settle the debt.

The discount is usually associated with a discount rate, which is also called the discount yield. The discount yield is simply the proportional share of the initial amount owed (initial liability) that must be paid to delay payment for 1 year.

Discount Yield  =  "Charge" to Delay Payment for 1 year  /  Debt Liability

It is also the rate at which the amount owed must rise to delay payment for 1 year.

Since a person can earn a return on money invested over some period of time, most economic and financial models assume the "Discount Yield" is the same as the Rate of Return the person could receive by investing this money elsewhere (in assets of similar risk) over the given period of time covered by the delay in payment. The Concept is associated with the Opportunity Cost of not having use of the money for the period of time covered by the delay in payment. The relationship between the "Discount Yield" and the Rate of Return on other financial assets is usually discussed in such economic and financial theories involving the inter-relation between various Market Prices, and the achievement of Pareto Optimality through the operations in the Capitalistic Price Mechanism, as well as in the discussion of the "Efficient (Financial) Market Hypothesis". The person delaying the payment of the current Liability is essentially compensating the person to whom he/she owes money for the lost revenue that could be earned from an investment during the time period covered by the delay in payment. Accordingly, it is the relevant "Discount Yield" that determines the "Discount", and not the other way around.

As indicated, the Rate of Return is usually calculated in accordance to an annual return on investment. Since an investor earns a return on the original principle amount of the investment as well as on any prior period Investment income, investment earnings are "compounded" as time advances. Therefore, considering the fact that the "Discount" must match the benefits obtained from a similar Investment Asset, the "Discount Yield" must be used within the same compounding mechanism to negotiate an increase in the size of the "Discount" whenever the time period the payment is delayed is extended. The “Discount Rate” is the rate at which the “Discount” must grow as the delay in payment is extended. This fact is directly tied into the "Time Value of Money" and its calculations.

The "Time Value of Money" indicates there is a difference between the "Future Value" of a payment and the "Present Value" of the same payment. The Rate of Return on investment should be the dominant factor in evaluating the market's assessment of the difference between the "Future Value" and the "Present Value" of a payment; and it is the Market's assessment that counts the most. Therefore, the "Discount Yield", which is predetermined by a related Return on Investment that is found in the financial markets, is what is used within the "Time Value of Money" calculations to determine the "Discount" required to delay payment of a financial liability for a given period of time.

BASIC CALCULATION

If we consider the value of the original payment presently due to be $P, and the debtor wants to delay the payment for t years, then an r% Market Rate of Return on a similar Investment Assets means the "Future Value" of $P is $P * (1 + r%)^t , and the "Discount" would be calculated as

Discount = $P * (1+r%)^t - $P  

where r% is also the "Discount Yield".

If $F is a payment that will be made t years in the future, then the "Present Value" of this Payment, also called the "Discounted Value" of the payment, is

$P = $F / (1+r%)^t   

Example

To calculate the present value of a single cash flow, it is divided by one plus the interest rate for each period of time that will pass. This is expressed mathematically as raising the divisor to the power of the number of units of time.

Consider the task to find the present value PV of $100 that will be received in five years. Or equivalently, which amount of money today will grow to $100 in five years when subject to a constant discount rate?

Assuming a 12% per year interest rate it follows

Discount rate

The discount rate which is used in financial calculations is usually chosen to be equal to the Cost of Capital. The Cost of Capital, in a financial market equilibrium, will be the same as the Market Rate of Return on the financial asset mixture the firm uses to finance capital investment. Some adjustment may be made to the discount rate to take account of risks associated with uncertain cash flows, with other developments.

The discount rates typically applied to different types of companies show significant differences:

• Startups seeking money: 50 – 100 %
• Early Startups: 40 – 60 %
• Late Startups: 30 – 50%
• Mature Companies: 10 – 25%

Reason for high discount rates for startups:

• Reduced marketability of ownerships because stocks are not traded publicly.
• Limited number of investors willing to invest.
• Startups face high risks.
• Over optimistic forecasts by enthusiastic founders.

One method that looks into a correct discount rate is the capital asset pricing model. This model takes in account three variables that make up the discount rate:

1.      Risk Free Rate: The percentage of return generated by investing in risk free securities such as government bonds.

2.      Beta: The measurement of how a company’s stock price reacts to a change in the market. A beta higher than 1 means that a change in share price is exaggerated compared to the rest of shares in the same market. A beta less than 1 means that the share is stable and not very responsive to changes in the market. Less than 0 means that a share is moving in the opposite of the market change.

3.      Equity Market Risk Premium: The return on investment that investors require above the risk free rate.

Discount rate= risk free rate + beta*(equity market risk premium)

Discount factor

The discount factor, P(T), is the number which a future cash flow, to be received at time T, must be multiplied by in order to obtain the current present value. Thus, a fixed annually compounded discount rate is

For fixed continuously compounded discount rate we have

REAL ESTATE SECTOR IN THE WORLD

REAL ESTATE SECTOR

1.1 Background Of The Study

Bangladesh is an independent country of South Asia. It is a small country; but its

population is very large in proportion to its area. In a developing country like Bangladesh where population has been increasing without any stopping, need for house has got more importance in recent past. At present, the population of different cities of Bangladesh is increasing rapidly in which the population density of Dhaka City is larger then any other city. The causes are population growth, migration of rural population to urban areas and developing new area in the Dhaka City. The population growth rate of Bangladesh is high, at over 2.30% ever year. The 1996 census records the urban population represents almost 20 percent of the total population of the country. This population is growing at. an alarming rate of over 5% per year. The growth of urban population indicates the high demand for urban residential houses. The growth rates of population in urban are-is are higher than those of the national. During the period from 1961 to 1973 the national population increased by 71.36% but the urban population increased 179.06%, which is about seven times the national growth. A recent study by the United Nations reveals that by 2012 D. The population of Dhaka will be 2 core as compared to 490 millions in 1985.

Bangladesh is one of the Least Development Countries' in the world, with annual per capita income of USS 90. Extreme poverty continues to be a major problem in urban areas where approximately 20% of the population live in hard core- poverty. The standard of shelter in such a poor country is correspondingly low some 23% of urban dwellings are of a temporary structure. In some urban areas upto-10% of the population have no living accommodation at all. Overcrowding and minimal or no infrastructure and services are further problems.

Most of the people of our country live in the rural areas. But in rural areas job opportunities are very low. For this reason, migration is increasing from rural areas to urban areas. As a result, population is increasing rapidly in urban areas. Most of the people living in rural areas are ill created and poor. Most of the house in result areas is Jhupri, Kacha Ghar, and Semipaca.

Acute shortage as well as poor state of housing services characterizes the urben housing sector in Bangladesh. Housing is one of the basic human needs like food and clothing. It provides shelter safety and sense of belonging to employment generation and overall productivity improvement. But in Bangladesh the housing situation is unsatisfactory in both rural and urban areas

in respect of numbers as well as conditions. In the urban areas housing situation is more degrading as it is characterized by higher degree of inequality. Population has been increasing without any potential stop sign; seed for house has of more importance in the recent past. But now the population problem has further deteriorated in the city area.

1.2 Problem Statement

The main focus of this report is to analyze the problems and prospects in the Latif Real Estate Limited. It also helps to bring the idea of the overall functions and situation of the real estate organization. Real Estate sectors now a first growing sector and for the economic development and improvement of the country it needs to emphasis the overall condition. The remarkable problems in real estate sector are as follows:

·         Limited land property

·         Cost of land and building materials rising

·         Competition increasing

·         Govt. rules and regulation barriers

·         Legal barriers

·         Shortage of capital

1.3 Objective Of The Study

The primary purpose of this report is to get an idea about the Business Plan of “Latif Real Estate Limited”, a third generation country and make an industry analysis on the Real Estate sector of Bangladesh.

Specific Objectives

·         To find out the position of “Latif Real Estate Limited ” in the Real Estate sector.

·         To find out how its present strategy is working.

·         To analyze the comparative performance of “Latif Real Estate Limited ” and some other selected private Limited Company.

·         To know the successive position of each Real Estate sector.

·         To analyze the performance in some key areas.

·         To find out existing problems of the Company.

·         To formulate alternative strategies for solving the problems.

·         To recommend some better solutions for solving the problems.

·         To formulate an implementation plan for the recommended steps.

·         To formulate a contingency plan as a safeguard for changing situation.

1.4 Research Methodology

Research Design

Both descriptive and exploratory researches have been selected to analyze this paper. Here the researcher discussed the credit appraisal procedure of ADL and critically analyze the appraisal procedure with the standard one. Comparison analysis has also been taken part in this study.

Data Collection Procedures

There are two main sources of collecting data. To complete this report data has been collected from both primary and secondary sources. The primary data has been gathered by formal discussion with the credit officials and borrowers. Some secondary data has also been collected to make the report more concrete. These data has been collected from different financial statements, annual reports, newspapers, books and business outlets and materials etc. that they prepare to submit in the head office.

1.5 Limitation

To prepare this report, I have faced some limitations, which are mentioned below.

Limitation of time

It was one of the main constraints that hindered to cover all aspects of the study.

   Lack of Secondary        

   The annual report was the main secondary Information0

   source of information that was not enough to

   complete the report and private

   the reader a clear idea about the Company.

Limitation of the Scope        

While collecting data, they did not disclose much information due to the confidentially of the organization.

	Chapter-2 Scenario Regarding The Main Topics Of The Reporting Bangladesh

 

                  

2.0 Rules And Regulations Of Capital City Development Authority

After preparing the design or plan, every body have to receive permission from capital City Development Authority under the rules of construction of Imarat, or this Architecture should help them. But under the constitution of Capital City Development Authority's 6 section, it is very clearly identify that the aduate architect or engineer, Diploma architect or engineer prepares plan or design for three floors building but High raise building it should be prepared by only graduate architecture or engineer. The other article of this section is follows:

Documents should be placed with attached the followings:

i) Seven copies of design with area and site of land,

ii) The existing road and nearest road of land.

iii) The Metric units measure it and design will be prepared according to the Metric unit and also attached indicators so that easy to identify the North side.

iv) After that, one can place his application with signature of architecture, C.S. design, the way to entire to the land evidence of ownership, layout of plan and others. The road will be wide near about 3.65 miter of the plot and link road of this Site. If residence and non-residence land is closely related, then in case of build building on non-residence area it should keep minimum distance of 2.5 meter from residence area and open windows is not permitted to the residence site.

d)  For genera! maintenance of site, you can make a wall on destination line of 1.75 miter high or 2.75 miter high grill or make net or rallying wall for construction.

e)   According to the Capital City development Authority's constitution the maximum high of a building will not exceed the twice length of road near the building.

f)   The car parking facilities should be facilitated in each building.

g) The basement floor will be treated like Ground floor, and then it is first, second, third floor and so on.   [t is also mentioned that there is no bedroom, kitchen room, birth room will not.

h) The roof of building will be made with carefully so that the water could not fall into other building or place. It is also "kept in mind that open your window, sunshade, only for .50 miter.

i) There is a secret door to be attached for come out the house in case of any type of , danger. Beside this, it is necessary to have a fire alarm, fire ' mechanisms and others.

j) The space for 1 meter behind of house and .80 meter for the both side of house should keep for the area of 134 sft house. In case of 132 to 200 miter house, the space for 1 meter behind the house and 1 meter for the both side of house should keep.

2.1 Construction Procedure

One can start his construction work after getting permission from this City Development Authority. The specified engineer will go to the land and test the soil and give the report to the concern people. If soil is soft then the deep foundation will need other wise unnecessary. In our country, to follow the "RCC frame" or " Brick work " procedure for constructing the building. Foundation may be done so quickly by the RCC frame to use concrete. According architecture, that brickwork is applicable only for four or five floor building.

2.2  Building Code

LFD : Load Factor Design        
LPG : Liquefied Petroleum Gas                                 
MCSP : Multipurpose Cyclone Shelter Programme     
OMRF : Ordinary Moment Resisting Frame
RC : Reinforced Concrete
RS : Rolled Steel
RSJ : Rolled Steel Joist
SMRF : Special Moment Resisting Frame
SPA : Surge Prone Area

          SRSS : Square Root of the Sum of the S.quares
          UBC : Uniform Building Code; Published by the ICBO        
          WSD : Working Stress Design

2.3 Importance And Role Of Real Estate Business In National Economy

Every person has a dream in his/ her soul to possess a beautiful house of his/her own. But it is very difficult to own a house now a day because of severe crisis of land and gradually increasing demand of housing. So, it is not possible for all to build a house purchasing land. So come the Real Estate business initiatives to fulfill the demand of residence of urban people. This statement so far includes only the importance of Real Estate business in our national life. The following points can also reveal the importance of Real Estate business specifically.

2.4 Contribution Of National Economy

Real Estate business affluence our national economy by  ensuring profits to the

Promoters and thus tax to the government.

2.4 A, Real Estate solve the problem of Housing and Resident

For the facilities of modern and better life pattern, people concentrated in urban area only with a job or merely with a business. Real Estates provide them Shelter and house for easy accommodation here in the urban area.

2.4 B, Securing and shifting to modern life

Real estate business improves our life pattern by proving housing facilities in a developed area and facilitates government to assist people easily in restructure facilities and utilities needed.

2.4 C, Real estate solve our unemployment problem

Real Estate business provides employment opportunities for our unemployed people. People are directly and indirectly benefited with various employ opportunities by the Real Estate business.

2.4 D, Real estate reform Social life

Real Estate business also assists people to develop better social life providing playground, community center, park and other social recreation facilities.Real estate business provides employment opportunities for our unemployed people. People are directly and indirectly benefited with various employer opportunities by this business. The development of the locality and extension local markets generates huge employment facilities for local unemployed people.In Bangladesh's city life, Real Estate plays an important role by providing easy accommodation facilities with safety shelter and better life pattern.

2.4 E, Rationality of Selecting 'Real Estate Sectors' as an object of Investigation

At present the birth rate in Bangladesh has decreased but the death rate also decreased, that is why the population is increasing day by day. With increasing population housing facilities are not increasing in tandem.It is fact that Real Estate now is a booming business. At present, in the urban area, it is no longer possible to provide accommodation facilities in according with the increasing demand of urban population. Because lands are not increasing although people are. For this, to assist all within this limited land, high rise buildings are been made for residence. This is, the increasing demand of housing and crisis of open space for constructing building, we have to go upward that is expanding housing vertically rather than horizontally. In this regard, Real Estate promoters are putting numerous contributions to light a kindle of hope among those who are land-less and homeless in urban areas. Bangladesh 'is the poorest south Asian country. The severe crisis of land for residence and the higher purchase value of land always frustrate the middle class,

It also uplifts the social status of civil people. We can not ignore its huge contribution in national economy, unemployment problem solving, environment protection and building a civil society. So, Real Estate is an important business contribution to the urban people as yet.

2.5 Real Estate Business Take The Challenges Of

      Urbanization

One of the major indicators of the advent of civilization is man's building a d- selling for himself with indigenous materials such as wood, stone, mud, straw, leaf, bones etc. As the pre- historic population increased, caves and niches could not accommodate them anymore. Man was forced to make a home to take shelter from rain, sun, and predatory animals. Thus began the process of human civilization many millenniums ago that continue in the present time. The climate, topography, and availability of building materials have determined the shape and size of human abodes down the centuries. Early Egyptian and Mesopotamian built their dwellings with mud and rock. Their kings built mighty p! ices and tombs with blocks of stones. Timber has been the most popular and widely used material for building homes all over the world. Bricks and concrete bricks gradually replaced timber in the urban areas. In the rural areas, especially of Asia. Africa and Latin America, umber is still being used to build homes.

Cities sprang up and began to spread all around the globe and this new phenomenon added a new dimension to the need for residential homes for a population belonging to various income groups. While sky-scrapers and luxury villas dotted the skyline, shanties grew silently in their shadows mocking an incompatible economic system. Cities began to allure rural population since the 30s and today it has created a horrific situation that needs to be taken care of an argent basis.

The need for a dwelling place is a basic one and every citizen of a country has the right to having one. For example, in Bangladeshi constitution also says in Article 15: " It shall be a fundamental responsibility of the state to attain through planned economic growth, a constant increase of productive forces and a steady improvement in the material and cultural standard of living of the people, with a view to securing to its citizens- The provision of the basic necessities of life, including food, clothing, shelter, education and medical care.....

" According to the UN, "

Rapid urbanization and globalization of the economy ha? resulted in increased productivity and economic competitiveness in most .cities However, it has also widened social inequalities, often leaving behind the pool, the uneducated and most critically, women and children. Success has also further marginalized ethnic and radical monitories, led to conflicts in urban environments.

These challenge are forcing local governments to assure new responsibilities in matters relating to economic,

Affairs, security and management of municipal services.

2.6 Problem Facing The Real Estate Sector

The Real Estate sectors are facing a lot of problems now a day. Government should taken these problems and inspire these sectors.

Problems are:

1. Government should restrict the VAT.

2. Government should provide complete safety and security for construction period of the projects.

3. The main items of these industries like, MS Rod, Cement, Stone chiefs, and   Bricks etc. are not strictly controlled by the government.

`As for example 30% construction price increased as a result the Tice of apartment ultimately raised.

4. Every   year   in    Dhaka   City   the   Real   Estate   company   giving   donation to miscreant tk. 30000000 for their safety and secure.

5. Most of the technical personnel when gathered their experience from these sector they are leaving these companies for high salary offers from sectors.

2.7 Future Strategy Of Real Estate Sector

Most of the Real Estate companies have charged their business strategy following points are mentioned here:

1.  Apartment sizes reducing, those means, Luxury and Spacious sizes from 3000 to 3200 sft now reduced 1500 to 2000 sft.

2.   Most of the developers are interested to build economy that like 1000 to 1200 sft.

3.  Most of the developers have founded out their target customer as retired government employees and their apartment price between 8 to 10 lacs.

4.  Fitting/ fixing/ structural stability is designed also in most economic way.

4. Bank loan arrangement has taken into consideration for the customer.

6.  Easy installment system also is providing for the customers.

Chapter-3

An Organizational Overview

 

3.0 Background

AKANKHA Developers Limited is a privet limited company form under the companies Act, XVIII of 1994. Since its inception, Akankha Development Company has been delivering various projects in apartment and building construction sector. It is now one of the fastest growing developers in the field of apartment construction sectors in the country. The company is founded and run by a steadily growing team of dedicated professionals having vast experience in this sector. Dhaka being the 8th largest mega city of the world and the overwhelming capital of the country and other major cities are expanding their boundary considering the growing demand of rehabilitating and commercial spaces in the modern area. Akankha Development Company is proceeding accordingly observing the diversified demand of the valued customers in the cities.

 

3.1 Corporate Information  

Latif Developers Limited the registered Office of the company will be situated in Bangladesh. The objects for which the company is established are all or any of the following and all the objects will be implemented after obtaining necessary permission from the Government/Concerns Authority/Competent Authority before commencement of Business.

The regulations contained in schedule I of the Companies Act, 1994 shall apply to this company with respect to such provision as are applicable to Private Limited Company so far only as they are not negative or modified by or are not contained in the following Articles or any other Articles that may from time to time be framed by the Company in general meting or by any statute.

                    

3.2 Share Capital

The authorized share Capital of the Company is TK. 5, 00, 00,000.00(Five Core) divided into 5, 00,000(Five Lac) Ordinary Shares of TK.100.00 (One hundred) each with power to increase or reduce the capital and to divide the shares for the time being into seal classes and top attach thereto such qualifier special rights, privileges and conditions as may be determined by the Company and to consolidate or subdivide the share and issue shares of higher or lower denomination.

The shares shall be under the control of the Board of Directors who may allot for cash or consideration other than cash or otherwise dispose of the same to such person in such manner or on such terms or conditions, as the Board of Directors think fit.

    3.3 Special Futures Of The Company

• It has been performing Residential and Commercial activity and striving to introduce Construction functions.

• It is the pioneer in introducing and launching different customer friendly different schemes to tap for channel sings the same to the productive sectors of the economy.

• For uplifting the standard of living of the limited income group of the population the Company has introduced Consumer different Schemes by providing financial assistance to the consumers for procuring household durables, which have had encouraging responses.

• The Company is committed to continuous research and development so as to keep pace with Real Estate Sector.

• The operations of the Company are fully computerized so as to ensure quick, prompt flawless and services to the customers.

• The Company has introduced camera monitor system (CCTV) to strengthen the security services inside the Company premises.

3.4 Company Objective

Latif Real Estate Limited. Specializes in residential and commercial real estate listings and sales in the Hot Springs and surrounding areas. Hot Springs offers so many amenities, including 622/A, Boro Mogh Bazar; 218, Boro Mogh Bazar; Road No-2, Bonani (Beside Lake); Panthapath (East Raza Bazar). Our firm’s primary objective is to be a successful negotiator for our clients, whether buyer or seller.

The Real Estate Company features a property management division.  We welcome for inquiries whether one are placing one’s property for lease or searching for the perfect lease for new home or commercial ventur

3.5 Role of the organization in the economic

      Development

F Business role of the LDL:

• Achieve business vision through quality and customer acceptance by providing services.
• Maintain highest ethical standards in every aspect.

·         Customer focus – a perspective of quality throughout:

·         The entire organization.

• All processes, systems and services.
• Compliance – with regulatory requirements.
• Added value – through continuous improvements to benefit customers and the bank.

Organ gram Latif Developers Ltd.

·    The Name of the Company isLatif Real Estate Limited.

·    The Registered Office of the Company will be situated in Bangladesh.

• The objects for which the Company is established are all or any of the following and all the objects will be implemented after obtaining necessary permission from the Government / Concerned Authority / Competent Authority before commencement of business

• To undertake and carry on all kinds and description of construction and to submit tender, quotations, estimates and to execute agreement with the Government agencies, corporations, private organizations or persons and to survey, supervise, design, construct, erect, maintain, improve, alter pull down, repair or rebuild any building, mills, factories, plants, communications, roads, bridges, water tanks, tanks, wells, reservoirs, embankments etc i.e. supplying of construction materials.

• To carrying on the business as Civil, Hydraulic, Electrical, Mechanical and all other kinds and descriptions of Engineers and to do all or any work of' construction in connection therewith.
• To undertake and carry on business of contractors, any kind of consulting engineering including planning, designing and supervision of any construction work.
• To carry on the business of builders, contractors, manufacturers and suppliers of any or all kinds of construction materials.

• To contract mills and factories and to lay down cables, wires, lines and lamp and to generate electricity and light.

·          

·         To carry on the business of improving and developing lands and properties belonging to the company or otherwise to the third parties whether Governments, semi government or private.

·         To establish, maintain and promote any branch office of the company in Bangladesh or elsewhere and to regulate or discontinue the same.

·         To buy or otherwise acquire any property movable immovable, to sell, exchange, surrender, transfer, lease, mortgage, convent, layout and dispose of and deal with property and right of all kinds.

·    To take on lease, purchase, acquire any lands, buildings, mills, factories, works, machinery and any immovable property of any description which may be deemed necessary or convenient to any business which the company is authorized to carry on.

·         To borrow or raise money from any bank, financial institution or from any other source and to secure the payment or repayment of such loans or debts in such manner as may be determined by the Directors of the company and in particular by creation of mortgages or charge on all or any of the movable or immovable property of the company, both present and future including its uncalled capital or by the issue of' debenture or debenture stock of the company charged on all or any of the property of the company and to take loan or borrow money or such further terms and conditions as may be determined by the lenders and the directors of the company

·  To invest money of the company not immediately required in such manner as may from time to time be determined.

·  To carry on the business which may seem to the company of being conveniently carried on in connection with any of object of the company or which may seem directly or indirectly to benefit the company.

·  To create and issue different classes of shares, debenture, stocks and to redeem, cancel, accept or surrender any share, debenture or debenture stock.

·  To do all or any of the above objects in any part or of the whole either as principals, agents, contractors, trustee or otherwise or either alone or in co-operation/ collaboration with others and whether by or through agents, sub-contractors or otherwise and to appoint suitable persons, firms or companies for that purpose.

·  The liability to the members of the company is limited by shares.

     Interpretation

• In these present unless there is anything repugnant in the subject or context.
• The Company" means "LATIF DEVELOPERS LIMITED."

• “The Act" means the Companies Act, XVIII of 1994 for the time being in force in Bangladesh.

• "The Office" means the Registered office of the Company for the time being.
• “The Director" means the Director of the Board of Directors of the Company for the 'Lime being.
• "The Board" means the Board of Directors of the company for the time being. The Managing Director" means the Managing Director of the company.
• 'The Registrar" means the Registrar of Joint Stock Companies & Firms, Bangladesh. 'Month" means calendar month according to English calendar year.
• "The seal" means the common seal of the company.

Limited Company

The company is a "Limited Company" within meaning of Section 2 (1) under clause I'A) of the Companies Act, 1994 and accordingly the following provisions shall be applicable to the company.

• No invitation shall be issued to the public to subscribe for any share or debenture of the Company.

·      The number of members of the Company, (exclusive of the persons in the employment of the Company) shall be limited to fifty, Provided however that when two or more persons hold one or more shares in the Company jointly they shall be treated as a single member; and

·      The right to the transfer shares of the Company shall be restricted in the manner and to the extent hereinafter appearing.

• The business of the Company shall include all or any of the several objects expressed in the Memorandum of Association.