.A real estate broker, who makes his living by buying and selling properties, is

Question

.A real estate broker, who makes his living by buying and selling properties, is evaluating the purchase of 10 acres of land for $83,000 cash now to be sold in the future for a profit. What escalated dollar sale value must the land have in 3 years to give a constant dollar investment DCFROR of 26% per year if annual inflation is projected to be 12%? Assume that the capital gain from the land sale will be taxed as ordinary income at an effective tax rate of 30%.

A)$278,651
B)$316,337
C)$297,631
D) $345,121

Explanation / Answer

b.$316,337

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