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25 August, 11:56

Suppose a parcel of land promises to return $750 per year per acre. what is the capitalized value of the land if the interest rate is 7%?

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  1. 25 August, 12:20
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    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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