Question
Base your answers on the Loopnet listing for the property 44 Fort Greene Pl , Brooklyn, NY 11217. Assume if I pay the current asking
- Base your answers on the Loopnet listing for the property 44 Fort Greene Pl , Brooklyn, NY 11217.
Assume if I pay the current asking price and then must invest another $1 million dollars to renovate this property into 8 marketable condominiums that can be sold for $750,000 each. The project will take three years to complete. At the end of three years I will sell each unit for $750,000. My cash flows in year 1 and 2 will be minus $200,000. Would you advise me to make the investment? I have told you that I will am only interested in the development of this property if the net present value of the project is positive when a discount rate of 20 percent is used.
time | cashflow |
|
|
0 | -3,390,000.00 |
|
|
1 | -200,000 |
|
|
2 | -200,000 |
|
|
3 | 6,000,000.00 | 8 units x $750,000 |
Choose True if you advise to invest
Choose False if you advise not to invest
True
False
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