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question 29 Your company purchased a piece of land five years ago for $150,000 and...

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Finance

question 29

Your company purchased a piece of land five years ago for $150,000 and subsequently added $175,000 in improvements. The current book value of the property is $225,000. There are two options for future use of the land: 1) the land can be sold today for $450,000 on a net after-tax basis; 2) your company can destroy the past improvements and build a factory on the land. In consideration of the factory project, what amount (if any) should the land be valued at?

Select one:

a. The property should be valued at zero since it is a sunk cost.

b. The present book value of $225,000.

c. The original $150,000 purchase price of the land itself.

d. The sales price of $450,000 less the book value of the improvements.

e. The after-tax sales value of $450,000.

question 28

Given the following information, what is the standard deviation of stock A if it has an expected return of .27% in a boom economy, an expected return of 18% in a good economy, and an expected return of 3% in a recession? The probabilities of boom, normal, recession are 0.2, 0.6, and 0.2, respectively.

Select one:

a. 0.0773

b. 0.0703

c. 0.0128

d. 0.0697

e. 0.1159

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