Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A piece of land is coming to auction near your farm. Land has been selling for about $10,000 per acre in your area. From your
A piece of land is coming to auction near your farm. Land has been selling for about $10,000 per acre in your area. From your experience you determine that your annual net income to land from farming is $350/acre. You also determined that a capitalization rate you are comfortable with would be about 4%. Given this information, what is the maximum amount you would feel comfortable paying for this land? (2 points) What would the capitalization rate for the land be based off a value of $10,000 per acre and an annual net income to land of $350 per acre? (3 points) If you were unable to justify the purchase based on the numbers above, what aspects might you take into consideration to justify the purchase of the land? (3 points) A piece of land is coming to auction near your farm. Land has been selling for about $10,000 per acre in your area. From your experience you determine that your annual net income to land from farming is $350/acre. You also determined that a capitalization rate you are comfortable with would be about 4%. Given this information, what is the maximum amount you would feel comfortable paying for this land? (2 points) What would the capitalization rate for the land be based off a value of $10,000 per acre and an annual net income to land of $350 per acre? (3 points) If you were unable to justify the purchase based on the numbers above, what aspects might you take into consideration to justify the purchase of the land? (3 points)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started