Windsor's wants to encourage an electric vehicle research centre to locate in the city. The centre would be a non-profit organization and therefore would not pay taxes. Another community has offered to provide a $10 million, 20 year, 5% loan to be repaid in equal annual installments of $802,426. Ordinarily, the research centre would have to pay 8% interest on its financing. Instead of offering low-cost financing, Windsor's is thinking of offering free land. How much must the land be worth for the value of Windsor's incentive package to be the same as that of the competing city?

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The value of land should be equal to the present value of all the extra annual payments that the res... View the full answer