You Have Inherited 100 Acres of Iowa Farmland

question 6

Multiple Choice

You have inherited 100 acres of Iowa farmland. There is an active market in this type of land and other similar properties are selling for $10,000 per acre. If planted with corn, the net cash flows are expected to be $800 per acre forever. If the discount rate is 10%, how much is the land worth per acre?

• A) $10,000
• B) $8,000
• C) $18,000
• D) None of the above

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Definitions:

Electroconvulsive Therapy

A medical treatment most commonly used for severe major depression which involves brief electrical stimulation of the brain while the patient is under anesthesia.

Deep Brain Stimulation

A neurosurgical procedure that involves implanting electrodes within certain areas of the brain to regulate abnormal impulses in conditions like Parkinson's disease.

Pregnant

The state of carrying a developing fetus within the female body.