Real Estate Finance Question

Feb 12th, 2015
DreamIt
Category:
Business & Finance
Price: $10 USD

Question description

There is a mountain in North Carolina. In five (5) years, it will be zoned for 15 housing lots. At that time, one can install roads and infrastructure at a cost of $50,000 per lot. In the sixth year, with the infrastructure work complete, the lots can be sold for $150,000 each. Assume your opportunity cost is 7%, and your firm requires a 25% fee for land development. How much is the mountain worth today and why?

*****Please show be detailed steps and calculations as to how you arrived at the answer. Thanks!

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