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Question
Consider an investment in which a developer plans to begin construction, of a building that will cost $1,000,000, in one year if, at that point, rent levels make construction feasible. There is a 50 percent chance that NOI will be $160,000 and a 50 percent chance that NOI will be $80,000. Using the traditional approach, which is similar to the "highest and best use" approach, what will the land value of the property be at the completion of the construction, assuming a cap rate of 10 percent (12 percent discount rate and an NOI growth rate of 2 percent)?
A) $120,000
B) $200,000
C) $300,000
D) $833,333
Answer
This answer is hidden. It contains 19 characters.
Related questions
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A) The price paid for the land by the developer
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D) All of the above
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$
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