In order to improve the stability of his farm income, a farmer in Eastern Wyoming is considering working with a wind energy developer to build turbines on his land. Each turbine will increase the farmer's net revenue by $3,500 annually. He wants to host 30 turbines. The risk-free pre-tax discount rate is 8% and there is a risk premium of 4%. Inflation is 1.5% and the marginal tax rate is 20%. What is the present value of after-tax net returns over 6 years? $379,433 $408,115 O $388,554 $355,488 O None of the answers are correct

In order to improve the stability of his farm income, a farmer in Eastern Wyoming is considering working with a wind energy developer to build turbines on his land. Each turbine will increase the farmer's net revenue by $3,500 annually. He wants to host 30 turbines. The risk-free pre-tax discount rate is 8% and there is a risk premium of 4%. Inflation is 1.5% and the marginal tax rate is 20%. What is the present value of after-tax net returns over 6 years? $379,433 $408,115 O $388,554 $355,488 O None of the answers are correct

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The buyer of a piece of real estate is often given the option of buying down the loan. This option gives the buyer a choice of loan terms in which various combinations of interest rates and discount points are offered. The choice of how many points and what rate is optimal is often a matter of how long the buyer intends to keep the property. Darrell Frye is planning to buy an office building at a cost of $986,000. He must pay 10% down and has a choice of financing terms. He can select from a 9% 30-year loan and pay 4 discount points, a 9.25% 30-year loan and pay 3 discount points, or a 9.5% 30-year loan and pay 2 discount points. Darrell expects to hold the building for three years and then sell it. Except for the three rate and discount point combinations, all other costs of purchasing and selling are fixed and identical. (Round your answers to the nearest cent. Use this table, if necessary.) I want to know how to find this out: If Darrell chooses the 4-point 9% loan, what will be his…
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