What was homeowner ables expected annual stream of benefits

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Reference no: EM133613925

Problem: There is a perfectly competitive market for allocating land in San Diego County. A homeowner Able purchased a parcel of land for $200,000 to build a home. The discount rate is 5% and the $200,000 was their maximum willingness to pay. Type in your answers in the space below. What was homeowner Able's expected annual stream of net benefits (in dollars) of owning the land? Explain. (Think about the present value formula used to calculate the market price of land). Right after Able purchases the land, a freeway is built next to it. The noise and air pollution lowers the future dollar benefits of a prospective home on the land to $3000 annually into perpetuity. Able tries to sell the house. How much can Able get for it?

Reference no: EM133613925

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