How much would he be willing to pay for the quarry

Reference no: EM13236322

A road building contractor has received a major highway construction contract that will require 50,000 m^3 of crushed stone each year for 5 year. The stone can be obtained from a quarry for $5.80/m^3. As an alternative, the contractor has decided to try to buy the quarry. He believes that if he owed the quarry, the stone would cost him only $4.30/m^3. He thinks he could resell the quarry at the end of 5 years for 200,000. If the contractor uses a 10% interest rate, how much would he be willing to pay for the quarry?

Reference no: EM13236322

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