A commercial real estate developer is considering several options for developing a piece of property. The initial investment required for each opportunity, along with the expected cash flow at the end of the first year, the growth rate of the concern, and the cost of capital associated with each project is shown below: PROJECT Coffee Shop Clothing Store CF at end of Year 1 $89,000 $58,300 Convenience Store $99,400 Bike Shop $96,800 It is assumed each investment will operate in perpetuity after the initial investment. Question 1: Initial Investment $790,000 $480,000 $1,270,000 $1,010,000 Growth in CF 2.0% 3.0% 4.0% 5.0% Cost of Capital 12.0% 14.0% 11.0% 13.0%

Acominercial fea estate developer is considering several optons for developing a plece of property. It is assumed each investment wit operate is perpetuliy after the inilia investment: Question 1: Question 11 Which investment opportunty should the investor choose: A. Coffee shop 13. Clothing store c. Converience store D. llike shop Question 2 quenton wi above? A. No My dechion trom Question at is stil the most atractive option 8. Yes. The chacke made in Question st is no longer the most attractive cption. Acominercial fea estate developer is considering several optons for developing a plece of property. It is assumed each investment wit operate is perpetuliy after the inilia investment: Question 1: Question 11 Which investment opportunty should the investor choose: A. Coffee shop 13. Clothing store c. Converience store D. llike shop Question 2 quenton wi above? A. No My dechion trom Question at is stil the most atractive option 8. Yes. The chacke made in Question st is no longer the most attractive cption