Question: A group that includes former Lakers star Magic Johnson bought the Los Angeles Dodgers for $2.15 billion in 2012. The Dodgers reported earnings of $11.3

A group that includes former Lakers star Magic Johnson bought the Los Angeles Dodgers for $2.15 billion in 2012. The Dodgers reported earnings of $11.3 million (John Gittelsohn and Nadja Brandt, “Dodgers Costing $2.15 Billion Hinges on Property Return,” http://www.businessweek.com, April 4, 2012). Financial experts, puzzled by the high price, speculated that the new owners expect to make additional earnings from the surrounding land they purchased. If the real interest rate is 2%, how much do they have to earn annually for this purchase to make sense?

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