A Korean Auto-Part Supplier Is Evaluating an Investment Project to Build

question 3

Essay

A Korean auto-part supplier is evaluating an investment project to build a manufacturing plant close to Kia
Automobile Assembly Plant near West Point, Georgia. The supplier can obtain a 1-year option to buy the
required parcel of land near West Point area and if the land is purchased the price would be $1,500,000. The
land option, if purchased, would expire 1-year from now. The supplier has two years to make a decision on
whether to build the plant and start operations, once the land was purchased. The required capital investment
would be $5,000,000. They estimate that the land, if purchased, could be sold for 110% of its purchase price
anytime over next two years.
What would the company be willing to pay for the combined value of the land option?

---

Definitions:

Benzodiazepine

A class of psychoactive drugs known for their sedative, hypnotic, anxiolytic, and muscle relaxant properties.

Valium

A prescription medication used to treat anxiety, muscle spasms, seizures, and other conditions, known for its calming effects.

Anxiety Disorder

A mental health disorder characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.

First-Generation Antipsychotics

A class of drugs used primarily to treat psychosis, including schizophrenia, characterized by their dopamine antagonist properties.