Calculate the before-tax nominal terminal value

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Reference no: EM131933763

A farmer has recently bought a land for $2,000.00 and planned on selling the land in 8 years. The real price of land is expected to increase at 2% each year. Suppose that the inflation rate is 14% and the marginal tax rate is 11%.

(i) Calculate the real land price.

a. $1,526.11 b. $2,034.81

c. $2,484.87 d. $2,343.32

e. None of the answers are correct

(ii) Calculate the before-tax nominal terminal value.

a. $2,343.32 b. $6,684.52

c. $2,015.25 d. $2,085.55

e. None of the answers are correct

(iii) Calculate the after-tax-nominal terminal value.

a. $6,169.22 b. $1,828.02

c. $5,490.61 d. $5,949.22

e. None of the answers are correct

Reference no: EM131933763

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