Problem 13.08 – Boisjoly Enterprises Vacant Lot

Fundamentals of Financial Management, Concise

Brigham and Houston

11th Edition

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Determine the project's expected NPV if the tax is imposed, and also if the tax is not imposed. Calculate the value if management proceeds with it today. Determine if the existence of the abandonment option will affect the company's decision to proceed with the project today. Finally, determine the most the company would pay today (t=0) for the purchase option for the adjacent property.

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