Proceeds immediately to purchase the tract of property

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Reference no: EM131275387

A real estate developer has the option to purchase a tract of land near a proposed ‘supermall’ location. Her vision is to design a ‘planned’ community that integrates the neighborhood with the shopping and recreational opportunities of the new mall.

* Statistically, the probability of the mall project materializing [probability of success] is estimated at 0.90

• The developer must pay $300K per acre for the 100-acre tract

What is the developer’s risk cost if she proceeds immediately to purchase the tract of property?

A. $1.4M

B. $1.0M

C. $0.4M

D. $2.0M

E. $3.0M

Reference no: EM131275387

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