(Answered) Question a local authority is under severe financial

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Question: A local authority is under severe financial pressure and is considering selling some of the land it owns to a building company. The building company is offering to pay £150 000 for the land now or a payment of £40 000 a year for the next five years.

(a) If the current interest rate is 8 per cent, which option would you advise the local authority to take?

(b) How would your recommendation be affected by changes in the interest rate?

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