Question
1.Stu can purchase a house today for $110,000, including the cost of some minor repairs. He expects to be able to resell it in one
1.Stu can purchase a house today for $110,000, including the cost of some minor repairs. He expects to be able to resell it in one year for $129,000 after cleaning up the property. At a discount rate of 5.6 percent, what is the expected net present value of this purchase opportunity?
2.Marshall's purchased a corner lot five years ago at a cost of $498,000 and then spent $63,500 on grading and drainage so the lot could be used for storing outdoor inventory. The lot was recently appraised at $600,000. The company now wants to build a new retail store on the site. The building cost is estimated at $1.1 million. What amount should be used as the initial cash outflow for this building project?
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