A tract of land is expected to net $45 per acrefrom now into the foreseeable future. Assumethat your opportunity costis 6% or 0.06 and that your cost of borrowedfunds is 5% or 0.05. You are required to repay anyborrowed funds over a30 year period with 30 equal annual payments.Assume that you have $250,000 to invest in land.Determine:• The maximal price you could pay for the landand still generate a rate of return equal to youropportunity cost.• The minimal per-acre down payment requiredif the investment is to "cash flow" in the first year.• The maximal number of acres you can purchaseand meet the lender's "cash-flow" requirements.Please show all work without using excel. Thankyou!

Initial investment is $250000 A Tract of land is expected to be $45 r(real)=0.06 i(real)=0.05 NP=30…

Answered: A tract of land is expected to net $45…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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