Question: BBX agrees today to enter into a contract with BSX that requires BBX to pay BSX 1,000,000 British pounds in exactly 1 year from today

BBX agrees today to enter into a contract with BSX that requires BBX to pay BSX 1,000,000 British pounds in exactly 1 year from today for a certain building. The building is expected to generate net income for the year equivalent to 100,000 British pounds and has no other costs. Naturally its value may vary depending on market conditions. No money changes hands between BBX and BSX today. The current risk free rate in Britain is12% per year. If the current market value of the building is 1,000,000 British pounds, is this a fair deal for BBX.

You need to present your views to the Board of BBX.

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