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Should your firm purchase the farm to subdivide

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Reference no: EM133063022

Question - Your firm has the opportunity to purchase a 50 acre dairy farm just outside the suburban area of your city for $2.5 million. Your firm will be applying for rezoning to subdivide the land into 5 acre blocks, each to sell for $500000. You believe there is a 30% probability that the rezoning application will be successful. If the rezoning is successful in the next year, your firm will subdivide the land in the second year. If the zoning doesn't change your firm will be able to sell the properties for the same value but at a cost of $500000. Should your firm purchase the farm to subdivide?

Reference no: EM133063022

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