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 planted with corn,you expect that the land will deliver net cash flows of $800 per acre forever.If the discount rate is 10%,how much is the land worth per acre?
A) $10,000
B) $8,000
C) $18,000
D) $12,000
Correct Answer:
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