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Question 2 You own a small piece of commercial land near a university. You are...

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Question 2 You own a small piece of commercial land near a university. You are considering what to do with it. You have been approached with an offer to buy it for $220,000. You are also considering three alternative uses yourself: a bar, a coffee shop, and an apparel store. You assume that you would operate your choice indefinitely, eventually leaving the business to your children. You have collected the following information about the uses. Which option should you go for? Cash flow in the First Year (CF) $60,000 $40,000 Growth rate (g) 3.5% Cost of capital (1) 12% Initial Investment $400,000 $200,000 $500,000 Bar 3% 10% Coffee Shop Apparel Store $75,000 3% 13%

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