Final answer:
B) No, the price Mrs. Murphy paid for her property last year is not a reliable basis for its current market value, as market value fluctuates over time influenced by a variety of factors.
Step-by-step explanation:
The price Mrs. Murphy paid for her property last year is not necessarily a good basis for determining its current market value. Market value is determined by what a buyer is willing to pay at the present time, and this can be influenced by many factors including market conditions, the condition of the property, and changes in the surrounding area.
For example, Freda's house, which was purchased for $150,000, would now sell for $250,000, showing that the market value can appreciate independently of the original purchase price.
Similarly, Frank put down 20% on a $100,000 house, borrowed the remainder, and now the house has increased in value to $160,000. This demonstrates that market values fluctuate and are not strictly tied to the purchase price.
Therefore, the correct answer to the question is B. No, Mrs. Murphy's original purchase price is not a reliable indicator of current market value. It is important to appraise property based on current market conditions and other relevant factors.