Your Firm Is Considering Building a New Office Complex

question 15

Multiple Choice

Your firm is considering building a new office complex.Your firm already owns land suitable for the new complex.The current book value of the land is $100,000.However a commercial real estate agent has informed you that an outside buyer is interested in purchasing this land and would be willing to pay $650,000 for it.When calculating the NPV of your new office complex,ignoring taxes,the appropriate incremental cash flow for the use of this land is:

• A)$650,000.
• B)$0.
• C)$100,000.
• D)$750,000.

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Definitions:

System-1

Fast, automatic, intuitive approach of processing information, often contrasted with the slower, more deliberate reasoning of System 2.

System-2

A term used in psychology referring to the analytical and conscious mode of thinking, characterized by slower, more deliberate, and logical reasoning.

Ethical Decisions

Choices made based on moral principles and values, considering what is right and wrong.