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never [62]
3 years ago
12

Suppose a parcel of land promises to return $750 per year per acre. what is the capitalized value of the land if the interest ra

te is 7%?
Business
1 answer:
sergij07 [2.7K]3 years ago
6 0

A capitalized value of land is the value of the land calculated on Total return per year divided by the interest rate.

The capitalized value of land = Return on land per year ÷ Interest rate

Where Return on land per year = $750

Interest Rate = 7%

The capitalized value of land = $ 750 ÷ 0.07

= $ 10,714.29

Therefore, the capitalized value of land if the interest rate is 7% is $ 10,714.29.

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