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You can buy a piece of vacant land for $30,000 cash. You paln to hold it...

You can buy a piece of vacant land for $30,000 cash. You paln 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. Assuming that you want 10% rate of return,

A. 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?

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Answer #1

Solution a) Calculate the net price of land at present (PV) using the expression; PV=30000 (F/P, 10%, 15) + 600(F/A, 10%, 15)

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