3. Cash flows (S6.1) In 1898, Simon North announced plans to construct a funeral home on land...
Question:
3. Cash flows (S6.1) In 1898, Simon North announced plans to construct a funeral home on land he owned and rented out as a storage area for railway carts. (A local newspaper commended Mr. North for not putting the cart before the hearse.) Rental income from the site barely covered real estate taxes, but the site was valued at $45,000. However, Mr. North had refused several offers for the land and planned to continue renting it out if, for some reason, the funeral home was not built. Therefore, he did not include the value of the land as an outlay in his NPV analysis of the funeral home. Was this the correct procedure? Explain.
174 Part One Value
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Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans