Question: Your firm is considering a project that will require building a factory on a piece of land the firm already owns. It purchased the land

Your firm is considering a project that will require building a factory on a piece of land the firm already owns. It purchased the land two years ago for $4 million, and if the factory is NOT built, the firm would instead sell the land for $5 million. Ignoring taxes, how should the firm account for the land when estimating the project's year-0 cash flow?

outflow of $4 million

inflow of $5 million

outflow of $1 million

outflow of $5 million

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