Jim Owns a Farm That He Wants to Sell

question 108

Multiple Choice

Jim owns a farm that he wants to sell.He learns that a highway will be built near the farm in the future,giving access to the farmland from a nearby city and thus making the land attractive to housing developers.Expecting the net present value (NPV) of the sale to be greater after the highway is built,he decides not to sell at this time.What real option is Jim taking?

• A)option to delay
• B)option to expand
• C)option to abandon
• D)option to switch
• E)option to sell

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Definitions:

Economic Prospects

The expected future financial performance or potential for growth of an economy, region, or specific market.

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Indigenous peoples in the United States with distinct cultures, languages, and histories, recognized as sovereign nations by the federal government.

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Coils of wire in electrical devices, such as motors and generators, that generate magnetic fields when current flows through them or induce current when they rotate in a magnetic field.