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 in 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?

  • CreatedOctober 30, 2015
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