1. Rents and market values are closely related. a. The discount (interest) rate is i. Give...

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1. Rents and market values are closely related. a. The discount (interest) rate is i. Give a general expression for the market value of a property that promises to yield a series of after-tax rents, r, 2, 3, 4 where each rt corresponds to the total rental income for years 1, 2, 3 and 4. b. Consider a vacant acre of land that rents for $500,000 per year after taxes. Assume this rent will hold in the future. The discount rate is 7%. What should be the market value of this land for a 5-year tenure. c. Supposed that you were promised an unlimited tenure for the same land as in (b). Compute the market value of this land. 1. Rents and market values are closely related. a. The discount (interest) rate is i. Give a general expression for the market value of a property that promises to yield a series of after-tax rents, r, 2, 3, 4 where each rt corresponds to the total rental income for years 1, 2, 3 and 4. b. Consider a vacant acre of land that rents for $500,000 per year after taxes. Assume this rent will hold in the future. The discount rate is 7%. What should be the market value of this land for a 5-year tenure. c. Supposed that you were promised an unlimited tenure for the same land as in (b). Compute the market value of this land.