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Would you build the motel

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Question - A parcel of land costs $700,000. For an additional $600,000 you can build a motel on the property. The land and the motel should be worth around $1,500,000 next year. Now suppose that similar commercial real estate investments with the same risk as this investment offer a 6% expected return. a) Would you build the motel? b) Why or why not? c) What is the discount rate above which this project would not be a good investment?

Reference no: EM133155414

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