You own a property on the outskirts of the city and are considering building either a 5.000 square meter apartment block with five units or two single-family homes with 2.000 square meters each. The cost of building the single-family houses is 150 per square meter and the cost of building the apartments is 130 per square meter. The real estate market, however, is very volatile. If it develops well in the next year. the houses can be sold for 340 per square meter and the apartments for 190 per square. meter. If the market develops badly, the houses can only be sold for 200 per square. meter and the apartments for 180 per square meter. Today, comparable family houses sell for 290 per square meter and comparable apartments sell for 181.6 per square meter. First-year rents (paid at the end of the year) for the comparable apartments and houses are 3% of today's sales prices, respectively. a) What is the implied risk-free rate, assuming that short selling is allowed? b) What is the value of the property, assuming that building construction will take place immediately or one year from now? Assume that the cost of construction as well as the revenue from selling are incurred simultaneously to construction start (i.e. today or in one year). What is the best building alternative?