Valuation of land as an investment

Reference no: EM1357934

Julia currently is considering the purchase of some land to be held as an investment. She and the seller have agreed on a contract under which Julia would pay $1,000 per month for 60 months, or $60,000 total. The seller, not the real estate business, acquired the land several years ago by paying $10,000 in cash. Two alternative interpretations of this transaction are (1) a price of $51,726 with 6 percent interest and (2) a price of $39,380 with 18 percent interest. Which interpretation would you expect each party to prefer? Why? (AICPA adaptive).

Reference no: EM1357934

Questions Cloud

Determine which project will you fund : Suppose your hurdle rate is 15 percent. The first project is a seven year project with an expected IRR of 15.2% and the second project is a five year project with an IRR 15.3 percent.

Calculate the means and standard deviations of the returns : Calculate the means and standard deviations of the returns of each of the four companies over the period. Do the risk-return patterns for these companies correspond with your prior expectations? Why or why not?

Googles four functions of management : Explain how internal and external factors affect the four functions of management of the company Google.

Illustrate impact of the federal reserve bank : Illustrate what do you think will be the impact of the federal reserve bank $600 billion purchase. Apply ALL of your knowledge on MONETARY POLICY to answer this question.

Valuation of land as an investment : Julia currently is considering the purchase of some land to be held as an investment. She and the seller have agreed on a contract under which Julia would pay $1,000 per month for 60 months, or $60,000 total.

Skill of dialogue and leadership : Identify its importance to change leadership and achieving shared understanding. Please provide a reference.

Design randomized algorithm for solving decoding problem : The Viterbi algorithm is a deterministic algorithm for solving the Decoding problem. Design a randomized algorithm for solving the Decoding problem.

What is the ratio of the cardinals magnitude : What is the ratio of the cardinals magnitude. One mole of tungsten (6 1023 atoms) has a mass of 184 grams, and its density is 19.3 grams per cubic centimeter. You have a long thin bar of tungsten, 2.3 m long, with a square cross section, 0.15 cm on..

Compute the company cm ratio and break even point : Memofax, Corporation produces memory enhancment kits for fax equipments. Sales have been very erratic with some months showing a profit and some months showing a loss.

User Account

All Pages