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Starting from the general expression of the NPV of farm land as illustrated in lecture: N NPV = -INV + 1-2 My -T (1 +
Starting from the general expression of the NPV of farm land as illustrated in lecture: N NPV = -INV + 1-2 My -T (1 + i)n '(1 + i)N n=1 1. Define each of the symbols within the equation above and further describe the meaning of each of the three (3) additive terms on the right-hand side of the equation. (1.5 points) 2. Under a particular set of circumstances, the second term can be expressed as: P1 1+i NPV Net Earnings Series = (1 t) SPV[U 1+9p -1),N] 1+9p (a) Describe the unique circumstances for which the above is true and WHY it is useful to describe the relationship in this manner. (1.5 points) (6) Demonstrate the algebraic manipulations that prove that under the circumstances that you describe that this representation is identical to the second additive term in the original equation. (2 points) (Be sure to define any new symbols that appear here before your derivation.) Starting from the general expression of the NPV of farm land as illustrated in lecture: N NPV = -INV + 1-2 My -T (1 + i)n '(1 + i)N n=1 1. Define each of the symbols within the equation above and further describe the meaning of each of the three (3) additive terms on the right-hand side of the equation. (1.5 points) 2. Under a particular set of circumstances, the second term can be expressed as: P1 1+i NPV Net Earnings Series = (1 t) SPV[U 1+9p -1),N] 1+9p (a) Describe the unique circumstances for which the above is true and WHY it is useful to describe the relationship in this manner. (1.5 points) (6) Demonstrate the algebraic manipulations that prove that under the circumstances that you describe that this representation is identical to the second additive term in the original equation. (2 points) (Be sure to define any new symbols that appear here before your derivation.)
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