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QUESTION
If Microns discount rate for valuing cash flows is 15%, does it make sense to buy the land at the current $1,000,000 price?
If Micron"s discount rate for valuing cash flows is 15%, does it make sense to buy the land at the current $1,000,000 price? The farmer who owns the land is willing to sell Micron an option to purchase the land for $1,000,000 in one year for $50,000. Should Micron purchase the option?
