Use the Table for the Question(s)below

question 25

Multiple Choice

Use the table for the question(s) below.
-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 interested in purchasing this land would be willing to pay $650 000 for it. When calculating the net present value (NPV) of your new office complex, ignoring taxes, the appropriate incremental cash flow for the use of this land is

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

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Definitions:

Purchases

The act of buying goods and services, typically for the purpose of resale in the ordinary course of business.

Consignee

A person or company to whom goods are shipped for sale, who receives and sells the goods on behalf of the consignor.

Consignor

The consignor is the party that owns goods or merchandise and entrusts them to another party, known as the consignee, for the purpose of sale.

Installment Plan

A method of payment where goods are purchased and possessed immediately, but payment is divided over a specified period of time in equal amounts.