Covid Construction Company owns the right to erect an office building on a parcel of land in
Question:
Covid Construction Company owns the right to erect an office building on a parcel of land in downtown Milwaukee over the next year. This building would cost $80 million to construct. Due to low demand for office space in the downtown area, such a building is worth approximately $70 million today. If demand increases, the building would be worth $90 million a year from today. If demand decreases, the same office building would be worth only $60 million in a year. How can we value the right to build an office building on the land? In your answer clearly identify relevant factors, some in numerical values. This question is a concept question and you don\'t need to show calculation.
Service Management Operations Strategy Information Technology
ISBN: 978-0077841201
8th edition
Authors: James Fitzsimmons, Mona Fitzsimmons, Sanjeev Bordoloi