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Farmer Joe is trying to decide whether he should purchase a piece of land. He knows that he can rent the ground to a neighboring
Farmer Joe is trying to decide whether he should purchase a piece of land. He knows that he can rent the ground to a neighboring farmer for $165/acre, and increase that rent by 2% each year. Furthermore, the capitalization rate is 5% and inflation is expected to hold at 2%. What is the land value?
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