Question
In order to improve the stability of his farm income, a farmer in Eastern Wyoming is considering working with a wind energy developer to build
In order to improve the stability of his farm income, a farmer in Eastern Wyoming is considering working with a wind energy developer to build turbines on his land. Each turbine will increase the farmers net revenue by $5,000 annually. He wants to host 28 turbines. The risk-free pre-tax discount rate is 7% and there is a risk premium of 6%. Inflation is 0.5% and the marginal tax rate is 18%. What is the present value of after-tax net returns over 6 years?
A. $483,101
B. $490,460
C. $506,465
D. $498,843
E. None of the answers are correct
Given a risk-free pretax discount rate of 10%, an inflation rate of 2%, a risk premium of 1.5% and a tax rate of 30%, calculate the real after-tax discount rate.
A. 10%
B. 7%
C. 8.05%
D.5.93%
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