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Your company, Bis Bullders, LLC , is considering purchasing a commercial building in Fayetteville, Arkansas. At first, this investment seems like a slam dunk The
Your company, Bis Bullders, LLC is considering purchasing a commercial building in Fayetteville, Arkansas. At first, this investment seems like a "slam dunk" The build ling is in a great part of the city, and it is so reasonably priced at only $ Upon inspection, you find out that the building contains asbestos and will also need other improvements. Those upgrades are expected to cost around $ The process is expected to take approximately years, and the expected sale price will be $
First, use your financial calculator to figure the rate of return on this investment. Remember, you need to make one of the numbers negative for it to calculate properly.
Next, compare the return on this investment to a mutual fund earning Calculate the future value of your funds if you invested the total investment amount purchase price improvements in a mutual fund at for years.
Finally, tell me which you would choose... Would you undertake the venture for the added value, or would you do the passive equity investment? Explain your answer.
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