Each Parcel of Land in a New Development Is Selling

question 12

Multiple Choice

Each parcel of land in a new development is selling for $15,000 and the total project revenue is estimated to be $5,000,000. The project lender has stated that the loan should be paid off when 80% of the total project revenue has been earned. The total loan amount is $3,500,000. What is the release price for each parcel?

• A) $8,400
• B) $13,215
• C) $18,750
• D) None of the above

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Definitions:

Verification

The process of confirming the truth, accuracy, or validity of something, often involving the examination of evidence or conducting tests.

Satisficing

A decision-making strategy that entails choosing an option that meets a minimum level of satisfaction, rather than the optimal solution, due to constraints such as limited information or time.

Prospect Theory

A behavioral economic theory that describes how people make decisions between alternatives that involve risk, where the potential for losses influences choices more than equivalent gains.

Closing Costs

Fees and expenses, over and above the price of the property, incurred by buyers and sellers in transferring ownership of a property.