1. Your firm is considering building a new office complex. Your firm already own

Question

1.     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 is 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 the land is:

a.       650000 inflow

b.      0

c.       100000 inflow

d.      650000 outflow

Explanation / Answer

a. 650000 inflow

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