Example 8.3 NPV and Mutually Exclusive Projects Problem: You own a small piece of commercial land near a university. You are considering what to do with it. You have been approached recently with an offer to buy it for $220,000. You are also considering three alternative uses yourself: a bar, a coffee shop, and an apparel store. You assume that you would operate your choice indefinitely, eventually leaving the business to your children. You have collected the following information about the uses. What should you do? Cash flow in the GrowthCost of capital 12% 10% 13% Initial Investment First Year rate $60,000,:: 1. 3.5% 3% Bar Coffee shop Apparel Store $500,000 $400,000 $200,000$40,000 $85,000 3