Describe expected monetary value of net present worth

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Reference no: EM13213016

Your company owns a parcel of land in a currently undeveloped part of the county. As the neighboring city grows eastward, you believe there is a 50% chance of residential development, a 20% chance of industrial development, and a 30% chance of no development of the area surrounding the parcel of land. If you build a roller rink and the land is developed residentially the roller rink will have a present worth of $2,000,000. A roller rink in an industrial area will have a present worth of $20,000 and in an undeveloped area a present cost of $3,000,000. The comparable values for a gas station are: residential $250,000, industrial $200,000, and undeveloped $10,000 (present worth, not cost). Based on expected monetary value of net present worth, what, if anything should be done with the land?

Reference no: EM13213016

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