Q8:

Belmont Inc. owns a few buildings on which were ruined by hurricanes. Since it will require a great sum of money to fix the buildings, Belmont wishes to sell the buildings. It has located three potential buyers:

Buyer A, who is willing to pay $700,000 for the buildings now.

Buyer B, who is willing to make 15 annual payments of $100,000 each, with the first payment to be made 5 years from today.

Buyer C, who is willing to make 10 annual payments of $100,000 each, with the first payment to be made today.

Assuming that the appropriate rate of interest is 8%, to whom should Belmont sell the building? Show calculations.