Consider an investment in which a developer plans to begin construction of a building that will cost $1,000,000 in one year if, at that point, rent levels make construction feasible. There is a 50 percent chance that NOI will be $160,000 and a 50 percent chance that NOI will be $80,000. Assuming a cap rate of 10 percent (12 percent discount rate and an NOI growth rate of 2 percent) what would the land value be at the completion of the construction under the real options approach?

Not the highest and best use approach!