Consider the following land purchase: 300 acres total; $120,000 total purchase price. You receive pre-tax Conservation Reserve Program (CRP) payments of $40 per acre for 150 acres while the other 150 acres you expect a $15 pre-tax return per acre for each year. The non- government payments are in real terms. - 9.0% nominal pre-tax cost of capital. 2.0% expected general inflation 21.0% tax bracket 20.0% capital gains tax ratec 20-year planning horizont 5. (10 points) Determine if the investment is desirable by calculating the NPV and CRCs using our NPV budget format under the above assumptions. Note: For calculating the tax amount (Tax Amount = Gain X Tax Rate) on the land investment, you will need to use the capital gains tax rate rather than the regular income tax rate. 6. (5 points) What is the maximum bid price (P) per acre? Hint: Your terminal value should be $178,313.69 in Question 5. Use this for Question 6. 7. (5 points) What is the breakeven terminal value (TV) for this land investment? Consider the following land purchase: 300 acres total; $120,000 total purchase price. You receive pre-tax Conservation Reserve Program (CRP) payments of $40 per acre for 150 acres while the other 150 acres you expect a $15 pre-tax return per acre for each year. The non- government payments are in real terms. - 9.0% nominal pre-tax cost of capital. 2.0% expected general inflation 21.0% tax bracket 20.0% capital gains tax ratec 20-year planning horizont 5. (10 points) Determine if the investment is desirable by calculating the NPV and CRCs using our NPV budget format under the above assumptions. Note: For calculating the tax amount (Tax Amount = Gain X Tax Rate) on the land investment, you will need to use the capital gains tax rate rather than the regular income tax rate. 6. (5 points) What is the maximum bid price (P) per acre? Hint: Your terminal value should be $178,313.69 in Question 5. Use this for Question 6. 7. (5 points) What is the breakeven terminal value (TV) for this land investment