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Keith Vaughn is trying to sell a piece of raw land in Alaska. Yesterday, he received two offers. Sally Youngblood offered Keith $10,000 in cash,
Keith Vaughn is trying to sell a piece of raw land in Alaska. Yesterday, he received two offers. Sally Youngblood offered Keith $10,000 in cash, payable on signing the deed. Billy Budd offered him $11,424, payable one year after signing the deed. Suppose that Keith can earn 12% simple interest for one year on federally insured deposits at his bank. Keith is satisfied that both buyers are honest and financially solvent, so he has no fear that the offer he selects will fall through. Which offer should Keith accept, and why?
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