In 1985, Alice Paid $20,000 for an Option to Purchase

question 46

Multiple Choice

In 1985, Alice paid $20,000 for an option to purchase ten acres of land. By paying the $20,000, she bought the right to buy the land for $100,000 in 1992. When she acquired the option in 1985, the land was worth $120,000. In 1992, it is worth $110,000. Should Alice exercise the option and pay $100,000 for the land?

• A) Yes
• B) No
• C) It depends on what the rate of inflation was between 1985 and 1992.
• D) It depends on what the rate of interest was.

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Definitions:

Privileged Backgrounds

Refers to individuals who come from socio-economically advantaged families, providing them with opportunities and advantages that are not available to everyone.

Southern

Pertaining to or characteristic of the South, a region in the United States known for its distinct cultural, historical, and social traits.

Greensboro Sit-in

A civil rights protest in 1960 where African American students sat at a segregated Woolworth's lunch counter in Greensboro, North Carolina, demanding service.

Arms Race

A competition between nations for superiority in the development and accumulation of weapons, especially between the United States and the Soviet Union during the Cold War.