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Developers interested in attracting new business to an area

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Joined: 18 Dec 2011
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Kudos [?]: 8 [0], given: 113

Developers interested in attracting new business to an area [#permalink] New post 16 Feb 2012, 18:04
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A
B
C
D
E

Difficulty:

  15% (low)

Question Stats:

100% (02:05) correct 0% (00:00) wrong based on 32 sessions
Developers interested in attracting new business to an area should invest initial capital in construction of buildings appropriate to each site. Although purchase prices will be slightly higher, the sites will be more attractive because potential buyers will not have to spend money out of pocket to build.

Which of the following, if true, would most undermine the soundness of the suggestion that developers construct new buildings before inviting potential buyers?

• Construction costs in the area most attractive to new business are higher than in other parts of the city.
• Developers are aware of the types of business wishing to move into the area and concentrate on designing appropriate buildings.
• If developers do not sell every lot with a building on it, they will still be able to rent the space and regain some of their investment.
• Zoning regulations in some areas require that specific building materials be used, which could result in unforeseen costs for developers.
• Potential buyers will likely want to design their own buildings, making it unlikely that they will purchase a site on which there is an existing structure.
[Reveal] Spoiler: OA
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Joined: 24 Jul 2011
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Kudos [?]: 274 [1] , given: 11

Re: Developers interested in attracting [#permalink] New post 16 Feb 2012, 20:11
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KUDOS
(A): The construction costs are irrelevant. Incorrect.
(B): This does not change anything. Incorrect.
(C): It is not clear if the investment that they regain will be worth more than what they will get if they sell plots with appropriately designed buildings. Incorrect.
(D): Even if unforeseen costs are there, it is still possible to make profits by selling plots with appropriately designed buildings. This is similar to (A) and hence incorrect.
(E): CORRECT. If potential buyers will still want to design their own buildings, there is wastage in investing capital to design appropriate buildings. This point, if true, will undermine the logic of the suggestion.
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Re: Developers interested in attracting   [#permalink] 16 Feb 2012, 20:11
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