Acme is considering building an office building and selling it in the future. They forecast: At t=0 it will cost them $7
Posted: Wed Mar 09, 2022 8:46 am
Acme is considering building an office building and selling it
in the future.
They forecast:
At t=0 it will cost them $700,000 to buy the land
At t=1 it will cost them $300,000 to develop
At t=2 they will sell it for $2,000,000 and pay 8% of the sale
price in selling expenses
If Acme's annual required rate of return is 50% their NPV is
equal to ................. (do not use commas or dollar signs.
round two decimal places. if negative, include minus sign)
Do you recommend they invest in this
building? (answer "yes" or "no")
in the future.
They forecast:
At t=0 it will cost them $700,000 to buy the land
At t=1 it will cost them $300,000 to develop
At t=2 they will sell it for $2,000,000 and pay 8% of the sale
price in selling expenses
If Acme's annual required rate of return is 50% their NPV is
equal to ................. (do not use commas or dollar signs.
round two decimal places. if negative, include minus sign)
Do you recommend they invest in this
building? (answer "yes" or "no")