Interprovincial Distributors Ltd. is planning to open a distribution centre in Calgary in five years. It can purchase a suitable piece of land for the distribution warehouse now for $450,000. Annual taxes on the vacant land, payable at the end of each year, would be close to $9000. What price would the property have to exceed five years from now to make it financially advantageous to purchase the property now instead of five years from now? Assume that Interprovincial can otherwise earn 12% compounded semiannually on its capital.

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The Answer of Interprovincial Distributors Ltd. is planning to open a distribution centre in Calgary in five years. It can purchase a suitable piece of land for the distribution warehouse now for $450,000. Annual taxes on the vacant land, payable at the end of each year, would be close to $9000. What price would the property have to exceed five years from now to make it financially advantageous to purchase the property now instead of five years from now? Assume that Interprovincial can otherwise earn 12% compounded semiannually on its capital.