15) What should you do if you own a piece of land that you bought 5 years ago for $50,000. The tax rate is 30% and you can assume you have sufficient other income to take advantage of all tax effects. Your after-tax discount rate is 7%. a. You can sell the land today for $200,000. b You believe the land will be worth $275,000 in five years because you expect a new shopping center to be built next to your land, so you can wait and sell the land at that time (in 5 years) C You can apply for a permit to transform today your land to a parking lot. The cost of the project will be $30,000 today, which will count as a deduction for taxes, and you expect the parking lot will generate yearly pre-tax profits for five years of $50,000 per year beginning in one year (first profit 12 months from now). However, a condition of the permit will be that after 5 years you will spend $30,000, that also will count as a tax deduction to convert the parking lot to a playground and that you will donate the land to the municipality. Your tax advisor tells you that you will be allowed a S200,000 tax deduction for the donated land 15) What should you do if you own a piece of land that you bought 5 years ago for $50,000. The tax rate is 30% and you can assume you have sufficient other income to take advantage of all tax effects. Your after-tax discount rate is 7%. a. You can sell the land today for $200,000. b You believe the land will be worth $275,000 in five years because you expect a new shopping center to be built next to your land, so you can wait and sell the land at that time (in 5 years) C You can apply for a permit to transform today your land to a parking lot. The cost of the project will be $30,000 today, which will count as a deduction for taxes, and you expect the parking lot will generate yearly pre-tax profits for five years of $50,000 per year beginning in one year (first profit 12 months from now). However, a condition of the permit will be that after 5 years you will spend $30,000, that also will count as a tax deduction to convert the parking lot to a playground and that you will donate the land to the municipality. Your tax advisor tells you that you will be allowed a S200,000 tax deduction for the donated land