Case Study $4$: $($remember to include your calculations. Just an answer will not receive full credit.$)$

You are the owner of an apartment building that is being offered for sale for $$1,500,000.$ You receive an

offer from a prospective buyer who wants to pay you $$500,000$ now, $$500,000$ in $6$ months, and

$$500,000$ in one year.

What is the actual present value of this offer, considering you can earn $12\%$ interest

compounded monthly on your money?

If another buyer offers to pay you $$1,425,000$ cash now $-$ which is a better deal?

Because you understand the "time value of money", you have negotiated a deal with the

original buyer, whereby you will accept the $3-$payment offer, but will charge $12\%$ interest

compounded monthly on the two delayed payments. Calculate the total purchase price under

this new arrangement.