PV of Owner-Financed Sale
September 23rd, 2022
P3-12. Ruth Nail has just received two offers for her seaside home. The first offer is for $1 million today. The second offer is for an owner-financed sale with a payment schedule as follows:
End of Year Payment
0 (Today) $200,000
Assuming no differential tax treatment between the two options and that Ruth earns a rate of 8 percent on her investments, which offer should she take?