Use the Following Information to Answer the Subsequent Questions

question 24

Multiple Choice

Use the following information to answer the subsequent questions. At site "A" the best current construction project is a retail plaza that would cost $3,000,000 to build exclusive of land cost) and would then generate net rents of $400,000/yr, expected to grow at 2% per year indefinitely. At site "B" the best current construction project is an office building that would generate net rents of $500,000 per year, expected to remain constant. Construction of the office building would cost $4,000,000 exclusive of land cost) . Suppose investors require a cap rate current net income as percent of investment) equal to 10% minus the expected annual growth rate in the net income.
-Based on the current best projects described above, which site is most valuable?

• A) Site A.
• B) Site B.
• C) Both sites are equal in value.
• D) Insufficient information to answer the question.

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Definitions:

High Conscientiousness

A personality trait characterized by thoroughness, carefulness, and efficiency.

Friendliness

A trait characterized by being kind, pleasant, and supportive towards others.

Interpersonal Domain

The interpersonal domain encompasses aspects of psychology that involve social interaction, relationships, and the influence of others on an individual's behavior and mental processes.

Achievement-Related Domain

A field or area of activity where the accomplishment or mastery of specific tasks is a primary goal.