Jim Owns a Farm That He Wants to Sell

question 7

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

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Definitions:

Mylanta

An over-the-counter medication used to treat symptoms of heartburn, acid indigestion, and gas, working by neutralizing stomach acid.

Kaopectate

A medication used to treat mild diarrhea, known for its ability to coat the lining of the gastrointestinal tract.

Antibiotic

A type of medication used to treat bacterial infections by killing or inhibiting the growth of bacteria.

Duracillin

A long-acting form of penicillin used for treating bacterial infections by inhibiting the bacteria's cell wall synthesis.