5.17. Consider two undeveloped land sites. At site 1, the highest and best use (HBU) is a warehouse that would cost $1 million to build (exclusive of land cost) and would then generate annual net rents of $150,000, which are expected to grow al 3% per year. At site 2, the HBU is an apartment building that can generate net rents of $800,000, projected to grow at 1% per year, with construction cost of $5 million. Suppose investors buying built properties (that is, properties already developed and in operation) require an initial annual return (in the form of current net income) of 12% minus the expected annual growth rate in the net income, as a percent of the investment cost. For example, they would want an initial yield or cap rate of 9% for the warehouse (12% -- 3% = 9%). Suppose the land value for site | is $1 million and the land value for site 2 is $2 million. On which of these sites (1, 2, both, or neither) is it currently profitable to undertake construction? Show your reasoning.