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The following data are given about a tract of farmland. Current rental values on land are about $120 per acre. Real estate taxes are $20
The following data are given
about a tract of farmland.
Current rental values on
land are about $120 per acre.
Real estate taxes are $20 per acre.
The general inflation rate
is 4 percent per year.
The long-term cost of
capital is 5 percent.
The real growth rate of returns fr
om the land is 2 percent per year.
Determine the following:
a)
The land's current market value
b)
The total nominal rate of return
c)
The nominal current rate of return
d)
The land's value one and two years from now.
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