1. You have the option to purchase some land for $100,000. There are always some farmers who will be willing to lease your land. If you expect to receive 8% return on this investment, how much should be the yearly lease for your land? Assume there is no inflation and hence the lease won’t increase.
2. A speculator has purchased land along the southern Oregon coast. He has taken out a ten-year loan with annual payments of $7,500. The loan rate is 6%. At the end of ten years, he believes that he can sell the land for $100,000. If he is right on the future price, did he make a wise investment?