Question

must be done in an excel sheet

сошие о са наш сайн vе vе vv? 9-4 А You can buy a piece of vacant land for $30,000 cash. You plan to hold it for 15 years and then sell it at a profit. During this period, you would pay annual property taxes of $600. You would have no income from the property. (a) Assuming that you want a 10% rate of return, at what net price would you have to sell the land 15 years hence? (b) What is open space conservation and why is it important? What options would you have in selling your property with this in mind?

Answer 1

ANSWER:

Part b can't be answered because it contains a topic which is not in finance and so i am answering part a.

a) i = 10% and n = 15

In excel we will find the future worth via the fv function.

=-fv(rate,nper,pmt,pv,type)

rate = 10% and nper = 15 , pmt = 600 , pv = 30000

=-fv(10%,15,600,30000,0)

=144,380.93

so the net price that i would sell for is $144,380.93

solving manually for your better understanding.

fv = pv(f/p,i,n) + annual tax(f/a,i,n)

fv = 30,000(f/p,10%,15) + 600(f/a,10%,15)

fv = 30,000 * 4.177 + 600 * 31.772

fv = 125,317.45 + 19,063.49

fv = 144,380.93

so the net price that i would sell is $144,380.93