Problem: Now assume that the property described in Question is owned by someone other than McDonald's, a ‘‘typical'' real estate investor by the name of Bob.

a. What is Bob's expected NPV from selling the property, evaluated from an MV perspective?

b. What is Bob's expected NPV from selling the property, evaluated from an IV perspective?

c. What if Bob tries to sell the property to McDonald's?

Question: Suppose a certain site has a McDonald's restaurant on it (equipped with the usual golden arches, etc.). As a McDonald's, the site can generate $50,000 per year, net cash. In any other use it can only generate at most $40,000 per year, and it would cost $20,000 to remove the golden arches. Assuming a 10% required return:

a. What is the market value of this property?

b. What is its investment value to McDonald's?