A1. Sell the land for $500,000. ·A2. Lease the property for a car-washing business. An annual income, after all costs (property taxes, etc.) of $98,700 would be received at the end of each year for 20 years. At the end of the 20 years, it is believed that the property could be sold for $750,000. ·A3. Construct an office building on the land. The building will cost $4.5 million to construct and will not produce any net income for the first 2 years. The probabilities of various levels of rental income, after all expenses, for the subsequent 18 years are as follows:

Annual Rental Income             Probability  

$1,000,000                                          0.1

1,100,000                                            0.3

1,200,000                                            0.4

1,900,000                                            0.2