Question
You want to buy land. One possibility would earn rent in year one of 133,000 per year with annual expenses of 43,000. Growth of rent
You want to buy land. One possibility would earn rent in year one of 133,000 per year with annual expenses of 43,000. Growth of rent and expenses of 2%. Construction would be $575,000 and the discount rate would be 17% The second option would have rent in year one of 197,000 with annual expenses of 73,000. The growth of rent and expenses would be 2.25% and the discount rate would be 15%. The construction cost would be $785,000. How much should you bid on this land? Hint, this is not a real option question.
A. 156,365
B. 212,362
C. 187,549
D. 256,963
E. 245,632
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