In 2005, 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 2012.  When she acquired the option in 2005, the land was worth $120,000.  In 2012, it is worth $110,000.  Should Alice exercise the option and pay $100,000 for the land? Calculate.

Answer rating: 100% (QA)

The decision to exercises the option should be based on whether or not it would be fi... View the full answer