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Need the exact calculations for the question posted below. foot per month and stay there forever and a 52% chance that they will stay at
Need the exact calculations for the question posted below.
foot per month and stay there forever and a 52% chance that they will stay at $96 per square foot per month forever. The cost of capital is fixed at 12.5% per year. a. Should you construct a building on the lot right away? If so, how large should the building be? b. If you choose to delay the decision, how large a building will you construct in each possible state in five years? a. Should you construct a building on the lot right away? If so, how large should the building be? If you choose to delay the decision, how large a building should you construct in the $197/ sq. ft. state in five years? It should be sq. ft. (Round to a whole number.) If you choose to delay the decision, how large a building should you construct in the $96/ sq. ft. state in five years? It should be sq. ft. (Round to a whole number.) If you wait, what is the expected value of the building today? The expected value is $ million. (Round to two decimal places.) b. If you choose to delay the decision, how large a building will you construct in each possible state in five years? If you build today, how large a building should you construct? It should be sq. ft. (Round to a whole number.) What is the NPV of the building today? $ million. (Round to two decimal places.) Should you invest today or wait five years? (Select from the drop-down menu.)Step by Step Solution
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