An investor is considering buying some land for $100,000 and constructing an office building on it. Three different buildings are being analyzed.
Building Height
2 Stories 5 Stories10
Stories
Cost of building $400,000 $800,000$2,100,000
(Excluding cost of land)
Resale value* of land 200,000 300,000400,000 and building at end
20-year analysis period
Annual rental income 70,000 105,000 256,000 after all operating expenses
have been deducted
Using benefit-cost analysis determine which alternative,if ant should be chosen. MARR 8%