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Assuming it's an 20" iMac G5 with 2GHz, 1.5GB RAM, 250GB HDD and a superdrive, 500$ sounds about right.

Also you get the newest iLife and iWork for nothing.
But there is no Office '09 if the seller means Microsoft Office.

But be sure to test the machine before you give the seller your money.
Run a hardware test with the Leopard install DVD.

You can use Mac2Sell.net to see current prices for older & used Macs.
 
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