Consider a scenario where a landowner has the option to develop a new building on their property. If the construction cost this year is $88 million, and there are two potential outcomes for the market value of the building next year, what are these outcomes?
With a 70% probability, the market may increase, resulting in a value of $113.21 million for the new building. However, there is also a 30% chance of a market decline, leading to a value of only $78.62 million.