You inherited 100 acres of Iowa farmland. There is an active market in this type of land, and similar properties currently sell for $10,000 per acre. If the land is planted with corn, you expect that the land will deliver net cash flows of $800 per acre forever. If the discount rate is 10 percent, how much is the land worth per acre?
A)$10,000
B)$8,000
C)$18,000
D)$12,000

Question

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The Answer of You inherited 100 acres of Iowa farmland. There is an active market in this type of land, and similar properties currently sell for $10,000 per acre. If the land is planted with corn, you expect that the land will deliver net cash flows of $800 per acre forever. If the discount rate is 10 percent, how much is the land worth per acre?
A)$10,000
B)$8,000
C)$18,000
D)$12,000

You Inherited 100 Acres of Iowa Farmland