Question

Lachlan has a Jacaranda growing in his yard. One of the tree limbs is growing over into Dan’s property. Dan does not like this and wants Lachlan to chop down the tree. Their respective benefits are shown below:

   Keeping Tree Chopping Down Tree

Gains to Lachlan ($) 1000    500

Gains to Dan ($)    100    1,006

Total ($) 1100

What is the amount that Dan would have to pay Lachlan so that each received half of the total extra gains from chopping down the tree? Answer to the nearest whole number in dollars (with no decimal places, $ sign, spaces or commas).

Answer 1

Case I : Keeping the branch of tree

Profits = $1000+$100

= $1100

Case II : Cutting down the branch

Profits= $500+$1006 = $1506

According to question,

Net Gain for opting option ii = $1506-$1100 = $406

Dan Would have to pay half the profit to the Lachlan,

So, He will pay $203 to lachlan

Now,

Overall Profit to lachlan = $500+$203 = $703

Overall Profit to Dan = $1006-$203 = $803