Choice "D" is correct. Opportunity cost is the potential benefit lost by selecting a particular course of action. In this question, opportunity cost is the revenue that will not occur ($1,200,000) if Carter develops the land instead of selling it.
Choice "c" is incorrect. The cost of development is not an opportunity cost of development.
Choice "a" is incorrect. The book value of the property is not an opportunity cost of development. The fair value that Carter can receive for the land is considered, not what the land originally cost.
Choice "b" is incorrect. The cash flow in the first year of operations is not an opportunity cost of development. It's an opportunity cost of selling the land.