A house-flipper has recently purchased a five-unit row-house for $2,400,000. The units are all in very rough shape, and

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A House Flipper Has Recently Purchased A Five Unit Row House For 2 400 000 The Units Are All In Very Rough Shape And 1 (49.29 KiB) Viewed 9 times

A house-flipper has recently purchased a five-unit row-house for $2,400,000. The units are all in very rough shape, and in order to resell them the house-flipper plans on selling each unit for $600,000 once the bathrooms and kitchen are renovated and the units are painted at cost of $125,000/unit. As well, in order to sell the units, the house-flipper will need to spend an additional $220,000 on land surveys, permits and legal costs for the entire five-unit row-house. (Ignore taxes)< A potential house buyer has offered to immediately purchase one of the units without any of the renovations.< Required: a) What are the relevant and irrelevant costs when deciding if the house-flipper should sell a unit unfinished to the potential buyer?< b) What is your indifference point (meaning that from a quantitative perspective what is the price being offered that you are indifferent to the offer, and any amount more than this means you would accept, and any amount less than this means you would reject the offer).< c) Suppose you have been offered a price to sell one of the units at your indifference point. What are at the qualitative factors for/against making this sale (at least six should be identified and discussed)?<