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b. Consider a vacant acre of land that rents for $500,000 per year after taxes. Assume this rent will hold in the future. The discount rate is 7%. What should be the market value of this land for a 5-year tenure. c. Supposed that you were promised an unlimited tenure for the same land as in (b). Compute the market value of this land.

b. Consider a vacant acre of land that rents for $500,000 per year after taxes. Assume this rent will hold in the future. The discount rate is 7%. What should be the market value of this land for a 5-year tenure. c. Supposed that you were promised an unlimited tenure for the same land as in (b). Compute the market value of this land.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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b. Consider a vacant acre of land that rents for $500,000 per year after taxes. Assume this rent will hold in the future. The discount rate is 7%. What should be the market value of this land for a 5-year tenure.

c. Supposed that you were promised an unlimited tenure for the same land as in (b). Compute the market value of this land. 

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$3,000 $2,750 $2,500 $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 0 $660 $240 1 ATC $120 2 $2,620 $60 3 $1,980 $120 4 $1,608 $1,380 $240 $480 $1,251 $840 5 6 7 Output Produced (q) $1,200 8 $1,200 $1,680 $2,280 9 $1,200 10 $1,342 $1,248 MC AVC 11 12 Consider the information in the file named Cost Functions of the Firm (also presented above). Total cost of producing 3 units equals dollars.
Transcribed Image Text:$3,000 $2,750 $2,500 $2,250 $2,000 $1,750 $1,500 $1,250 $1,000 $750 $500 $250 $0 0 $660 $240 1 ATC $120 2 $2,620 $60 3 $1,980 $120 4 $1,608 $1,380 $240 $480 $1,251 $840 5 6 7 Output Produced (q) $1,200 8 $1,200 $1,680 $2,280 9 $1,200 10 $1,342 $1,248 MC AVC 11 12 Consider the information in the file named Cost Functions of the Firm (also presented above). Total cost of producing 3 units equals dollars.
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