A land broker has indicated that she expects future


A land broker has indicated that she expects future economic development in the community where the land is located to lead to substantial appreciation in the land’s value over the next decade. The cost of the land is $200,000. While management does not expect to develop the land for use in the company’s operations, I estimate the value of the land will appreciate by approximately 11.25 percent annually during the next five years to $341,000. What is the NPV and is this a good investment?

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Financial Management: A land broker has indicated that she expects future
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