OvThe environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a lump - sum payment of $1 million, which would be paid at the beginning of the 20-year period. The agency has estimated that the land would generate $100,000 per year in benefits to hunters, bird watchers, and hikers. Assume that the lease price represents the social opportunity cost of the land and that the appropriate real discount rate is 6 percent. Assuming that the yearly benefits accrue at the end of each of the 20 years, calculate the net present value of leasing the land. The environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a lump-sum payment of $1 million, which would be paid at the beginning of the 20-year period. The agency has estimated that the land would generate $100,000 per year in benefits to hunters, bird watchers, and hikers. Assume that the lease price represents the social opportunity cost of the land and that the appropriate real discount rate is 6 percent. Assuming that the yearly benefits accrue at the end of each of the 20 years, calculate the net present value of leasing the land.
OvThe environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a lump - sum payment of $1 million, which would be paid at the beginning of the 20-year period. The agency has estimated that the land would generate $100,000 per year in benefits to hunters, bird watchers, and hikers. Assume that the lease price represents the social opportunity cost of the land and that the appropriate real discount rate is 6 percent. Assuming that the yearly benefits accrue at the end of each of the 20 years, calculate the net present value of leasing the land. The environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a lump-sum payment of $1 million, which would be paid at the beginning of the 20-year period. The agency has estimated that the land would generate $100,000 per year in benefits to hunters, bird watchers, and hikers. Assume that the lease price represents the social opportunity cost of the land and that the appropriate real discount rate is 6 percent. Assuming that the yearly benefits accrue at the end of each of the 20 years, calculate the net present value of leasing the land.
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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Transcribed Image Text:OVThe environmental protection agency of a county would like to preserve a piece of land as a wilderness area.
The current owner has offered to lease the land to the county for 20 years in return for a lump-sum payment of $1
million, which would be paid at the beginning of the 20-year period. The agency has estimated that the land would
generate $100,000 per year in benefits to hunters, bird watchers, and hikers. Assume that the lease price represents the
social opportunity cost of the land and that the appropriate real discount rate is 6 percent. Assuming that the yearly
benefits accrue at the end of each of the 20 years, calculate the net present value of leasing the land.
The environmental protection agency of a county would like to preserve a piece of land as
a wilderness area. The current owner has offered to lease the land to the county for 20 years in return
for a lump-sum payment of $1 million, which would be paid at the beginning of the 20-year period.
The agency has estimated that the land would generate $100,000 per year in benefits to hunters, bird
watchers, and hikers. Assume that the lease price represents the social opportunity cost of the land
and that the appropriate real discount rate is 6 percent. Assuming that the yearly benefits accrue
at the end of each of the 20 years, calculate the net present value of leasing the land.
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