SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN: 9780357391266
Author: Nellen
Publisher: Cengage
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The environmental protection agency of Verdesi 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 $1.1 million, which would be paid at the beginning of the 20-
year period. The agency has not yet estimated benefits, but has observed
the following in two other very similar counties:
County
Sanders
Entry Fee
$0.75
$0.50
Annual Visitors
55,000
110,000
Liu
Assume that the lease price represents the social opportunity cost of the
land and that the appropriate real discount rate is 4 percent.
A. Calculate the annual benefits accruing to recreational users of the
Verdesi County preservation, assuming that the county does not
charge any entry fee.
B. Assuming that the yearly benefits, which are measured in real dollars,
accrue at the end of each of the 20 years, calculate the net benefits of
leasing the land.
C. Some analysts in the agency argue that the annual real…
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