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1. You are considering purchasing a new house. Owning the house gives you an annual benefit of $7,000 and an annual cost of $2,000. Assume a discount rate of 5% and that you will own this house indefinitely. (15 points) a. What is your land rent for using it as a residential house? b. What is the land value for using it as a residential house? c. Now, assume that there is a developer who is actively planning to buy up all the neighboring parcels (including yours) to build an amusement park, and he is willing to pay $125,000 a parcel. Everyone knows this information, and the information is considered credible. How would this information affect the market price of your property? d. Now, the above story about the potential development of an amusement park fell through (meaning you only consider your land value based on the residential use ignore c. above). Suppose that there is an incinerator that generates environmentally hazardous gas in the municipality where the house is located. The municipality has already set aside a budget to install new technology to eliminate hazardous emissions, but it will cost each household an additional $200/year to do so. However, the air quality improvement is expected to result in $375/year for each household including this house. Given this information, what would be the land rent of this house? What is the land value? e. Suppose, alternatively, the municipality is still installing the new technology in the incinerator, but the improvement in the air quality only accrues to the neighboring community due to a particular nature of wind movement. In this situation, what would be your land rent and land value