Reference no: EM132484640

Point 1: In 1994, Bayton paid $150,000 ($300 per hectare) for a 500-hectare piece of land it intended to develop into a garbage dump. For various reasons Bayton has not yet developed the land but Bayton's president has stated that it will do so at the appropriate time. Over the last two years there have been two transactions involving the sale of land located near Bayton's property. In the first transaction, which occurred 20 months ago, the land was sold for $825 per hectare. In the second transaction, which occurred three months ago, the land was sold for $730 per hectare.

Point 2: Recently, a business person made an offer for Bayton's land of $690 per hectare or $345,000. The president of Bayton hired an independent appraiser to estimate the value of the land so he could assess the offer. The appraiser estimated the land was worth between $340,000 and $390,000. Two years ago, for the purpose of calculating property taxes, the local government where the land is located assigned it a value of $290,000. The president himself thinks that Bayton could sell the land for $425,000 if Bayton chose to sell it.

Required:

Question 1: Identify and explain the different measurements of the value of Bayton's land. Discuss the usefulness of each measurement for determining whether a good price is being offered for the land.