Question
An entrepreneur is considering acquiring a lot of land for $50,000 and develop it into one of three options: Option A open a gas station;
An entrepreneur is considering acquiring a lot of land for $50,000 and develop it into one of three options:
Option A open a gas station; Option B open a laundry; Option C open a nursery
He/she intends to keep the operation going for 15 years and then sell the land and the installed operation. His/her anticipated data are:
Implementation Yearly Benefits Revenue form System sale
Option A 65,000 25,000 15,000
Option B 180,000 45,000 80,000
Option C 120,000 35,000 30,000
He/she also anticipate that in 15 years the land price has increased to $75,000, and his/her cost of capital will remain unchanged at 6.0% for the duration of the investment.
QUESTIONS
- If the decision criteria is to maximize the Net Present Worth of the investment, which option should be selected? by using excel to backup your answer
- If the decision criteria is to realize a Return On Investment not lower than 20%, which option should be selected? by using excel to backup your answer
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