KF can obtain an option on a site for $100,000 on 31 December 2012. The option would give KF the right to purchase the site for $2.6 million on 31 December 2017. It is estimated that similar sites will then have a market value of $3 million. Calculate the present value of purchasing the option now and compare it with the present value of purchasing the land outright later on. Which is the better alternative? Why?
Paper#11796 | Written in 18-Jul-2015Price : $25