You are looking to invest raw land to eventually build a warehouse. The land costs $900k...
You are looking to invest raw land to eventually build a warehouse. The land costs $900k to purchase today and you will have to pay $25k per year in property taxes. At the beginning of the 9th year you plan to construct the building for $1M, which you will sell in the 10th year for $2.2 million
Should you invest given you have a risk-adjusted discount rate of 9%?
(show work for opportunity to earn partial credit, i.e. “CF0=x”)
NPV=
IRR=
Yes or no AND why?
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