Business, 02.04.2020 03:20 mecennabosaaen

An investor is considering buying some land for $100,000 and constructing an office building on it. Three different buildings are being analyzed.

Building Height

2 Stories 5 Stories 10 Stories

Cost of building (excluding cost of land) $500,000 $900,000 $2,200,000

Resale value of land building after 20-year horizon 200,000 300,000 350,000

Annual net rental income 70,000 110,000 215,000

Required:

Using benefit-cost ratio analysis and a 7% MARR, determine which alternative, if any, should be selected.

Answers: 2

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An investor is considering buying some land for $100,000 and constructing an office building on it....

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