4. Last year you heard a rumor that Seaside Heights, NJ was going to open a muse

Question

4. Last year you heard a rumor that Seaside Heights, NJ was going to open a museum in honor of the cast of The Jersey Shore. Hoping to cash in on the development, you bought a piece of land that was near the proposed site. The land cost $150,000, but the seller offered to finance 75% of the sale via an interest free loan for two years if you paid the rest in cash (you accepted this offer). Today Snookie and former Governor Christie formally announced plans for the "GTL Museum," with construction to take place next year. Based on this news, someone just offered to buy your land for $240,000 to build a parking lot near the new attraction. If you accept this offer, what will be your holding period return (%) from this investment?

Explanation / Answer

Holding period return (%) =( $240,000 - $150,000)/ $150,000

= 60%

Note : Interest will not be considered as it was a interest free loan.

From the question, it is being interpreted that the property has been sold within a year(if the offer is accepted)

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