Return to the model of pure economic rent depicted in Figure 5.1. Recall that the market value V of an asset such as land that lasts forever is V ¼ R/r, where R is the annual rent and r is the going interest rate. Let R ¼ $10,000 and r ¼ 0.05. Now introduce an annual property tax that is a proportion t of the market value of the asset. In other words, the owner of the asset must now pay tax in the amount of tV each year, where the tax rate t is 0.03 (i.e., a 3% tax on market value). What is the market value of the asset now?