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Why should the seller and not the buyer be more concerned

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Problem - A seller and a buyer agree that the sales/purchase price for land is $1.5 million down and two annual payments of $1.5 million each to be made over the next two years. The buyer intends to construct a building on the land that will be used as the buyer's warehouse. It will be built over the next two years. The seller proposes that the contract should read that the total selling price is $4.3 million and that the two deferred payments of $1.5 million each include interest at 4%, which is the current Federal intermediate-term rate but is less than the interest rate on commercial real estate. The land is a capital asset to the seller, and the holding period is four years. Why should the seller and not the buyer be more concerned about the stated interest rate?

Reference no: EM132672210

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