Johnson Company owns a plot of land on which is buried over 100 underground storage tanks...
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Johnson Company owns a plot of land on which is buried over 100 underground storage tanks filled with industrial waste. Since it will require several years and a considerable sum of money before the storage tanks can be removed safely from the property so the property can generate revenue, Johnson Co. wishes to sell the land now. It has located two potential buyers: Buyer 1, who is willing to pay $430,000 for the land now, and Buyer 2, who is willing to make 33 annual payments of $65,000 each, with the first payment to be made 8 years from today. Assuming that the appropriate rate of interest is 8%, to whom should Carey sell the land? Show calculations. Johnson Company owns a plot of land on which is buried over 100 underground storage tanks filled with industrial waste. Since it will require several years and a considerable sum of money before the storage tanks can be removed safely from the property so the property can generate revenue, Johnson Co. wishes to sell the land now. It has located two potential buyers: Buyer 1, who is willing to pay $430,000 for the land now, and Buyer 2, who is willing to make 33 annual payments of $65,000 each, with the first payment to be made 8 years from today. Assuming that the appropriate rate of interest is 8%, to whom should Carey sell the land? Show calculations.
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Answer rating: 100% (QA)
Buyer 1 Present value of Cash Flow 430000 Buyer 2 Year Cash Flow PV Factor 8 Present Value ... View the full answer
Related Book For
Quantitative Methods for Business
ISBN: 978-0324651751
11th Edition
Authors: David Anderson, Dennis Sweeney, Thomas Williams, Jeffrey cam
Posted Date:
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