Your Firm Is Considering Building a New Office Complex

question 87

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:

Logical Reasoning

The process of using a rational, systematic series of steps based on sound mathematical procedures and given statements to arrive at a conclusion.

Presentation Constructed

A prepared display or lecture aimed at informing or persuading an audience, meticulously organized beforehand.

Three Parts

Often refers to a method or structure that consists of three distinct components or stages.

Prestige Suggestion

A marketing tactic where products or services are presented as status symbols, encouraging purchases based on the perceived prestige or social standing they confer.