The shopkeeper or the landowner where the store sits

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Suppose you expand northward across 12th street. The gas station across the street can now expect to gain an additional $40,000 annual profit in perpetuity.

a. How will this affect the market price of the property where the gas station sits if the discount rate is 3%? (Show your work. I’m looking for a specific number as part of your answer)

b. According to the Leftover Principle, who will actually benefit from the extra profit – the shopkeeper or the landowner where the store sits?

Reference no: EM131743983

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