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On a certain parcel of land, you can build a project worth $2 million today,for a construction cost of $1.8 million. If you wait and
On a certain parcel of land, you can build a project worth $2 million today,for a construction cost of $1.8 million. If you wait and do not build the project until next year,the project would most likely be worth $2.2 million, and the construction cost would be $1.9 million. If investors require a 25% expected return for holding land, what is the value of the land today? Should you build the project today or wait until next year?
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