Question: Interprovincial Distributors Ltd. is planning to open a distribution centre in Calgary in five years. It can purchase suitable land now for the distribution warehouse

Interprovincial Distributors Ltd. is planning to open a centre in Calgary in five years. It can purchase suitable land now for the warehouse for $450,000. Annual taxes on the vacant land, payable at the end of each year, would be close to $9000. Rounded to the nearest dollar, what price would the property have to exceed five years from now to make it financially advantageous to purchase the property now instead of five years from now? Assume that Interprovincial can otherwise earn 12% compounded semiannually on its capital.

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