Calculate the after tax risk adjusted discount rate

Assignment Help Financial Management

Reference no: EM131323236

Mr. Agirich has the opportunity to purchase some farm land at $2000/acre. He expects that real land prices will increase at 4% per year and inflation will be 3%. His pretax adjusted discount rate is 14%. Assume that the land will be sold in 10 years and the marginal tax rate is 23%. The effective interest rate on land loans is 5%.

Calculate the after tax risk adjusted discount rate.

Calculate the present value of the after tax terminal value.

What is the approximate maximum bid price for this land?

Reference no: EM131323236

Questions Cloud

Dangers of having a team that is inexperienced : What are the dangers of having a team that is inexperienced in agile methodology, including the PM? How can an organization overcome this potential risk?

The bond first and then find the yield to maturity : A bond has a current yield of 7%, a coupon rate of 8% with semiannual payments, a face value of $1,000 and matures in 10 years. What is its Yield to Maturity? (Hint: You have to find the price of the bond first and then find the Yield to Maturity)?

Advantages of business process outsourcing : Question 1. List three advantages of Business Process Outsourcing. Please use current examples. Question 2. List and describe three general business categories that can be outsourced.

What would likely effect be of reducing property tax rate : In 2015 the property tax rate for the city was 2.0858%, while the median for the state was 1.89%. What is the likely effect on property values in the city? What would the likely effect be of reducing the property tax rate in the city to 1.3%?

Calculate the after tax risk adjusted discount rate : Mr. Agirich has the opportunity to purchase some farm land at $2000/acre. He expects that real land prices will increase at 4% per year and inflation will be 3%. His pretax adjusted discount rate is 14%. Calculate the after tax risk adjusted discount..

How the decisions are made based on statistics : 1. Of the other two project forms, pure and functional, which one would you think has the more in-depth communications plan? 2. How the decisions are made based on statistics?

What is the minimum and maximum number of nodes : What is the minimum and maximum number of nodes that might be generated by a depth first iterative-deepening search? (Assume that you start with an initial depth limit of 1 and increment the depth limit by 1 each time no goal is found within the c..

Comment on equity of income versus a consumption tax : Suppose two workers earn labor incomes of $20,000 per year in each of three years. One worker saves 20 percent of her labor earnings in each of the first two periods, and spends all her savings and accumulated interest in the final period. Calculate ..

Evaluate an application implementation plan : Given a set of organizational resource and timing constraints, evaluate an application implementation plan that balances multiple stakeholder considerations such as time, scope, quality, risk, and change.

User Account

All Pages