You are looking to invest raw land to eventually build a warehouse. The land costs $900k to purchase today and you will have to pay $25k per year in property taxes. At the beginning of the 9th year you plan to construct the building for $1M, which you will sell in the 10^th year for $2.2 million

Should you invest given you have a risk-adjusted discount rate of 9%?

(show work for opportunity to earn partial credit, i.e. CF0=x)

NPV=

IRR=

Yes or no AND why?

You are considering investing in the following opportunity: an apartment building costs $2M, you anticipate $100k per year in cash flow and wish to sell property in year 8 for $3.5M. Should you invest given you have a risk-adjusted discount rate of 10? (show work for opportunity to earn partial credit, i.e. CF0=x)

NPV=

IRR=

Yes or no AND why?