Question

Land is purchased for $62,500. Back taxes paid by the purchaser were $7,500; total costs to demolish an existing building were $11,000; fencing costs were $12,500; and lighting costs were $1,500. What is the cost of the land?

Option 1: $62,500
Option 2: $81,000
Option 3: $93,500
Option 4: $95,000

Answer 1

The total cost of the land, including back taxes, demolition, fencing, and lighting, in addition to the purchase price, adds up to $95,000.

Step-by-step explanation:

The cost of the land is not solely determined by the purchase price. Instead, it includes additional expenditures directly related to making the land useable for its intended purpose. This includes the back taxes, demolition costs, fencing, and lighting that are necessary to prepare the land for use. To calculate the total cost of the land, you sum these numbers together with the purchase price.

The cost of the land can be calculated by subtracting the additional costs from the total cost of the purchase. Total costs include the purchase price, back taxes, demolition costs, fencing costs, and lighting costs. Therefore, the cost of the land is $62,500 - $7,500 - $11,000 - $12,500 - $1,500 = $30,000. The correct option is $30,000.Therefore, the comprehensive cost calculation is as followsPurchase Price: $62,500Back Taxes: $7,500Demolition: $11,000Fencing: $12,500Lighting: $1,500Adding these amounts: $62,500 + $7,500 + $11,000 + $12,500 + $1,500 = $95,000.