A Real Estate Agent Wants You to Buy a Plot

question 65

Multiple Choice

A real estate agent wants you to buy a plot of land today for $60,000 and he promises that you can sell it back to him in 7 years for $100,000.If you can earn 9% on alternative investments,then what is the present value of the sales proceeds? Is this a worthwhile investment?

• A) $54,703.42; it is not a worthwhile investment.
• B) $54,703.42; it is a worthwhile investment.
• C) $61,294.51; it is not a worthwhile investment.
• D) $61,294.51; it is a worthwhile investment.
• E) $60,000; not enough information.