Consider the Following Situation in Which the Market's Expected Return $\quad$

Multiple Choice

Consider the following situation in which the market's expected return to investment in vacant land is 15% per annum:
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ HBU:
$\begin{array}{lcc} & \text { Today } & \text { Next Yr. } \\ & \text { known) } & \text { expected) } \\\text { Value of Completed Built Property }& \$ 500 & \$ 540 \\ \text { Constr \& Dvlpt Cost exclu land) } & \$ 400 & \$ 420 \\ \text { NPV immediate construction) }& \$ 100 & \$ 120\end{array}$



-In the above situation,

A) The option premium is due purely to the "growth premium".
B) The option premium is due purely to the "irreversibility premium".
C) The option premium is due neither to the "growth premium" nor the "irreversibility premium".
D) There is no "option premium".