Explain why you think is is or is not a good investment

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Reference no: EM131292773

Suppose you are asked to help your town administrator decide whether it is a good time to purchase open space in your town. A long time resident offers the town 5 acres of land adjacent to a new housing development. Both because the open space could raise the property values (and taxes) and because the land will grow in value you agree it might be a good investment. Explain why you think is is or is not a good investment.

Assume a 1year time horizon.

Assume the price of the land is 1 million dollars and the town has the money in their land conservation fund that is earning 10% per year.

It is estimated that in one year the land's value will be 1.2 million dollars.

Question: Is it a good investment?

Reference no: EM131292773

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