Question
Suppose a farmer is considering the purchase of additional farmland. It is believed that the operating revenue per acre of land per year will be
Suppose a farmer is considering the purchase of additional farmland. It is believed that the operating revenue per acre of land per year will be $760 and operating expenses will be $514 in present dollars. The inflation rate is expected to be 8% Assume that the marginal tax rate is 16% and that this farmer requires at least an 8% pre-tax, risk free return on capital.
(i) Calculate the nominal before-tax net returns at the end of year 1.
| a. | $308.19 | b. | $265.68 | |
| c. | $246.00 | d. | $244.43 |
e. None of the answers are correct
(ii) Calculate the nominal after-tax net returns at the end of year 2.
| a. | $279.59 | b. | $221.74 | |
| c. | $241.02 | d. | $223.17 |
e. None of the answers are correct
(iii) Calculate the nominal after-tax net returns at the end of year 3.
| a. | $241.02 | b. | $260.31 | |
| c. | $239.48 | d. | $301.96 |
e. None of the answers are correct
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Cases In Healthcare Finance
Authors: George H. Pink, Paula H. Song
7th Edition
1640553177, 978-1640553170
