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Rafael owned an apartment building that burned down. The empty lot is worth $50,000 and Rafael has received $240,000 from the insurance company. Rafael plans
Rafael owned an apartment building that burned down. The empty lot is worth $50,000 and Rafael has received $240,000 from the insurance company. Rafael plans to build another apartment building that will cost $275,000. His real estate adviser estimates that the expected value of the finished building on the real estate market will be $370,000 next year. The discount/interest rate is 11%. What are the NPV and IRR of this decision?
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