Reference no: EM132807735
problem 1: Jackie Meridee borrows $180,000 and acquires an income producing property for $180,000. She subsequently sells the property for $300,000 and, without repaying the funds borrowed to acquire the first property, uses the proceeds to acquire two other properties. The cost of property A is $120,000, while the cost of property B is $180,000. How will the $180,000 in borrowing be linked to the two new properties?
Option 1: It must be allocated proportionally based on the relative costs
Option 2: Ms. Meridee has flexibility with respect to the linking, as long as the allocation totals 300,000
Option 3: Ms. Meridee has flexibility with respect to the linking, as long as the allocation totals 180,000
Option 4: The borrowing will not be linked to the two new properties
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