Business, 18.08.2021 02:10 teamroper35

Mr. Agirich has the opportunity to purchase some farm land at $3,000/acre. He expects that real land prices will increase at 5% per year and inflation will be 2%. His pretax risk adjusted discount rate is 14%. Assume that the land will be sold in 10 years and the marginal tax rate is 23%. The effective interest rate on land loans is 6%. Required:
a. Calculate the after-tax risk adjusted discount rate.
b. Calculate the real price of land in 20 years.

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Mr. Agirich has the opportunity to purchase some farm land at $3,000/acre. He expects that real land...

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