Which of the following best describes the approach to valuing land as a "real option"?
A)The land value reflects the fact that the developer can wait to decide whether to construct a building on the site
B)The seller provides the investor with an option to purchase the land at a specific price before a certain date
C)The land is valued at its most probable use
D)The seller has an option to repurchase the land from the buyer before construction takes place

Question

Quizplus · Accepted Answer

Valuing land as a real option means considering the option to delay development and waiting for better information or opportunities to arise. Therefore, the land value reflects the possibility of waiting to decide whether to construct a building on the site, as stated in option A.

Which of the Following Best Describes the Approach to Valuing