Solution) Suppose there are three farmers (Farmer A and Farmer B and Farmer C). The current zoning allows the
Question: Suppose there are three farmers (Farmer A and Farmer B and Farmer C). The current zoning
allows the land to be used for any purpose. Farmer A has chosen Pig Farming. A Pig Farm will earn $50,000 profit, every year, forever.
a. Assume the interest rate is 10% per year. Using a present value equation--
\[PV=\frac{Y}{{{\left( 1+r \right)}^{n}}}\]What is the Pig Farm worth?
b. Suppose the next best use of Farmer A’s property is residential, where it could earn $20,000 per year. What is the minimum one-time payment Farmer A would accept to agree to restrict his land for residential use forever?
Price: $2.99
Answer: The solution file consists of 1 page
Type of Deliverable: Word Document
Type of Deliverable: Word Document
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