Carey Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Carey wishes to sell the land now.

It has located three potential buyers:

Buyer A, who is willing to pay $1,000,000 for the land now,

Buyer B, who is willing to make 20 annual payments of $110,000 each starting from today.

Buyer C, who is willing to make 10 annual payments of $220,000, but the payments will begin two years from today.

Assuming that the appropriate rate of interest is 9%, to whom should Carey sell the land? Why?

Please show your calculations to compare the present values of the three options.

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