Agri-Industries purchased some agricultural land at the edge of a large metropolitan area for $250,000 five
years ago.
In order to have the land classified as agricultural for property tax purposes, the company has been
leasing the property to neighboring farmers. The before-tax return from leasing the property is $12,000 per
year. This company's corporate tax rate is 35 percent. If the company sells the land for $400,000 today, what is
the internal rate of return on this investment?
Initial investment at time 0 = $250,000
Incremental after-tax cash flows time 1-5:
(1-.35)($12,000)= $7,800
Terminal after-tax cash flow time 5:
$400,000 - ($400,000 - $250,000)(.
You might also like to view...
Advertisements for products and services began appearing in American newspapers during the ________
A) early 1700s B) mid 1800s C) post-Civil War era D) early twentieth century E) Great Depression
The compensation provided by the government for obtaining a property through eminent domain is final and cannot be disputed further
Indicate whether the statement is true or false