Question
Frank owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of
Frank 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,
Frank wishes to sell the land now. It has located two potential buyers: Buyer Q, who is willing to pay $700,000 for the land now, and Buyer R, who is willing to make 20 annual payments of $110,000 each, with the first payment to be made 5 years from today.
Assuming that the appropriate rate of interest is 9%, to whom should Frank sell the land? Show calculations.
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