Option to purchase, Michael paid $20,000 in 2010 for an

Option to purchase

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Reference no: EM131094604

Michael paid $20,000 in 2010 for an option to purchase 10 acres of land. By paying the $20,000, Michael bought the right to buy the land for $100,000 in 2016. When Michael bought the option in 2010, the 10-acre land was worth $120,000. In 2016, it is worth $110,000. Should Michael exercise the option and pay $100,000 for the land and why?

Reference no: EM131094604

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