What fee would preserve normans original expectation

Reference no: EM132463965

Norman takes a call from his appraiser and receives the news that, in the appraiser's expert opinion, the project would actually earn a one-year return of 22% but if the building turns out to be worthless at the end of the year, Norman would not only lose all of his equity, but, should this happen he would also need to pay the city a fee for the demolition of the building and environmental restoration of the site.

a) What fee would preserve Normans original expectation of a 20% return by the end of the year?

b) If the current value of that fee does preserve his expectation, would Norman's concern be justified?

c) For this same fee, would Norman change his requested fee of $10 800 000 to sell the project rights?

Reference no: EM132463965

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