The Corner Garage is considering expanding its retail store by building on a vacant lot it currently owns. The lot was purchased four years ago at a cost of $299,000, which the firm paid in cash. A bit over a year ago the firm spent another $38,000 on land improvements, all of which was also paid in cash. Today the lot has a market value of $329,000.
What value for this lot should be included in the analysis of the project?
The sum of the cash paid to date for both the lot and the improvements.
The original purchase price only.
The current market value of the land plus the cash paid for the improvements.
The current market value of the land.
Zero because the land and the imporvments were purchased with cash.