6 To reduce your cash outflows shortly before it became public knowledge that the rare lions live near the lodge, you sign a contract with a colleague. This contract gives you the right to sell the lodge at any time in the next six months to your friend for TSh35million. Describe your position and that of your friend.

(15 marks)

A developer has just acquired 60 acres of property in Ngorongoro to develop a safari wildlife centre. The safari centre will also include a hotel development. In order to generate operating capital, the developer is selling rights. The rights give the holder of the contract the right to purchase a lodge in the hotel development for a fixed price. Each lodge is half an acre. The agreements expire six months after they are signed.
The developer is offering the following inducement. A potential lodge owner can purchase the lodge for TSh25million at the end of six months if the lodge owner enters into the contract this week. The purchase price for a lodge increases to TSh40million on all contracts signed after this week.