Options

NPV
Sell Land Now
$978,500
Do Project
$716,426

Selling Land

PV

$1,500,000 Price
($521,500) Tax
$978,500

Doing Project
Disc rate
PV

$1,500,000 Sale
$10,000 Book
35% $1,490,000 Capital gain

0
1
($1,800,000) $672,500
12%
$716,426

2
3
4
5
$673,900 $566,020 $475,040 $ 1,187,770

Operations
wk capital
tax savings
sale of land

$600,000
$10,000
$590,000
$206,500
$393,500

$
$
$
$
$

409,600
300,000
84,670
393,500
1,187,770

Sale
Book
Capital gain
Tax
Net of tax

What if land value increases