Your Firm Is Considering Building a New Office Complex

question 113

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 $130,000; however, a commercial real estate agent has informed you that an outside buyer is interested in purchasing this land would be willing to pay $700,000 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) $700,000
• B) $0
• C) $130,000
• D) $830,000

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Definitions:

Plantation Agriculture

A form of commercial farming where crops are grown for profit. It typically involves large-scale operations and focuses on a few high-demand cash crops like sugar, cotton, and tea.

Soil Erosion

The removal of the top layer of soil due to water, wind, or human activity, leading to decreased soil fertility and increased vulnerability to environmental challenges.

Traditional Agriculture

Farming practices that rely on indigenous knowledge, natural resources, and cultural beliefs, often with a focus on sustainability.

Large-Scale Farming

Agricultural operations that involve extensive areas of land and high levels of mechanization and technology to produce large quantities of crops or livestock.