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28 December, 19:30

The Market Farms purchased a parcel of land six years ago for $200,000. At that time, the firm invested $75,000 grading the site so that it would be usable. Since the firm wasn't ready to use the site itself at that time, it decided to lease the land for $40,000 a year. The Market Farms is now considering building a hotel on the site as the rental lease is expiring. The current value of the land is $225,000. The firm has no loans or mortgages secured by the property. What value should be included in the initial cost of the hotel project for the use of this land? Multiple Choice

a. $0

b. $200,000

c. $225,000

d. $229,000

e. $101,900

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Answers (1)
  1. 28 December, 23:14
    0
    C

    Explanation:

    The current market value of the land is a more appropriate measure of the cost of the land as this property had initially been used as an investment property given that it has been leased for the past six years.
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