Question: One year ago, you paid $12,000 for an empty plot of land. Today, you are considering developing it into a parking lot. It will cost

One year ago, you paid $12,000 for an empty plot of land. Today, you are considering developing it into a parking lot. It will cost you $60,000 today to turn this land into a parking lot. As a parking lot, you anticipate that it will generate $8,000 in revenue one year from today. Each year thereafter, forever, this amount will increase by 2% over the prior year. The required return for this project is 15% annually. Assume that you have no other ideas for what to do with this land; if you dont build the parking lot, it will not be used for anything else. Assume you will never sell this land.

What is the NPV of this investment?

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