Suppose a Developer Is Interested in Building a New Townhome

question 12

Multiple Choice

Suppose a developer is interested in building a new townhome community. Through his market research, the developer has determined that the target market makes up 10% (core market share) of the households that currently reside in the metropolitan area. If an analysis of data from the MLS indicates that there should be approximately 500 residential sales in this area over the next year, what is the projected number of units the developer could expect to sell in year 1 if he is able to capture 50% of the market potential?

• A) 500 units
• B) 250 units
• C) 50 units
• D) 25 units

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Definitions:

Liquid Assets

Assets that can be quickly converted into cash with minimal loss of value.

Rate of Return

The beneficial or detrimental shift in an investment's monetary value across a set timeline, expressed in terms of a percentage of the investment's primary investment.

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or its operating cycle, whichever is longer.