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QUESTION

A firm has a piece of land that was unused, but plans to build a new office complex on it in a new capital project.

A firm has a piece of land that was unused, but plans to build a new office complex on it in a new capital project. The market value of the land should be considered as a component of project cash flows provided that the land:

1. has the same market value as the book value.

2. has identifiable market value as it is an opportunity cost.

3. can be depreciated going forward.

4. has been fully depreciated as the market value a sunk cost.

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