Information on decision alternatives Michael recently won $50,000 in a state lottery. He wants to invest the

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Information on decision alternatives Michael recently won $50,000 in a state lottery. He wants to invest the money and is looking at several alternatives.

a. The first is an apartment house that is about eight years old and is fully occupied. It is managed by a real estate firm. The buyer could assume the current mortgage, which would require about $46,000 cash payment plus monthly payments on the mortgage.

b. One of Michael's acquaintances is vice president of a small company that wants to expand its operations. He indicates that for $50,000 Michael could acquire about 30 percent of the company's stock. The vice president owns about 5 percent of the company and the rest is owned by three other individuals.

c. A realtor has shown Michael a 50-acre plot of land selling at $1,000 per acre. It consists of slightly rolling ground with a brook running through one corner. About 60 percent of the land has a variety of trees growing on it; the rest is grassland.

REQUIRED Discuss what kind of information Michael should accumulate on each possible investment in order to decide which is most appropriate for him.

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Related Book For  book-img-for-question

Cost Accounting

ISBN: 9780538817646

2nd Edition

Authors: Les Heitger, Pekin Ogan, Serge Matulich

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