Using the same information regarding Mr. Arnold Benedict considering buying an apartment complex that is offered for sale by the firm of Getabinder and Flee (see material in question #2), consider the following:

You have been asked to provide Mr. Benedict some further assistance before he decides whether to make the purchase of this apartment complex. In doing research Mr. Benedict has found that there maybe a similar building being planned for construction close to the location of the building he is considering purchasing. If it is built he assumes it will have an impact on his ability to generate the rent that was originally estimated. Also, he is concerned regarding "risk" of a potential market downturn. He has asked you to look into this and advise him how this additional information may impact the analysis. After much research, you have come up with the following data. In the first table you have estimated the associated probabilities of different economic environments. You decided to not only consider a potential downturn in the market, but also if market conditions improved! As will be discussed later, the analysis completed above (and in problem set #2) could be viewed as resulting from a "good" economic environment.