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Calculate the present value for each of the buyer

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Question: Carey Company owns a plot of land on which buried toxic wastes have been discovered. Since it will require several years and a considerable sum of money before the property is fully detoxified and capable of generating revenues, Carey wishes to sell the land now. It has located two potential buyers: Buyer A, who is willing to pay $700,000 for the land now, and Buyer B, who is willing to make 20 annual payments of $110,000 each, with the first payment to be made 5 years from today. Assuming that the appropriate rate of interest is 9%.

Calculate the present value for each of the buyer

Buyer A

Buyer B

Reference no: EM132738336

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