<p>If you can get 4% annual returns elsewhere (relevant interest rate), then the asset returning 20,000 per year is worth 20,000 / 0.04 or 500,000.</p>

<p>In other words, 20,000 is 4% of the asset's present value and 500,000 is 100% if its present value.</p>

CC BY-SA 3.0
2015-12-05T11:12:09.307Z
2015-12-05T11:12:09.307Z
Arthur Tarasov
<p>Land is an indestructible capital asset that offers a perpetual revenue flow. You own a piece of land that returns $20,000 per year forever. The relevant real interest rate to consider is 4%. What is the present value of this land at time 0?I need to use integration here</p>

CC BY-SA 3.0
2015-12-05T19:35:59.627Z
This question is off-topic here. Please visit http://meta.economics.stackexchange.com/questions/1465/economics-se-policy-on-homework-questions   It could be migrated to http://money.stackexchange.com/
Alecos Papadopoulos
<microeconomics>
Present Value at time 0
Fatima Atavlieva
# Present Value at time 0

(Asked by: username_0 on 2015-12-05)

Land is an indestructible capital asset that offers a perpetual revenue flow. You own a piece of land that returns $20,000 per year forever. The relevant real interest rate to consider is 4%. What is the present value of this land at time 0?I need to use integration here

**Tags:** microeconomics

> **Comments:**
> **username_1**: This question is off-topic here. Please visit http://meta.economics.stackexchange.com/questions/1465/economics-se-policy-on-homework-questions   It could be migrated to http://money.stackexchange.com/  

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## 1 answers

### Answer by username_2 on 2015-12-05. Score: 1

If you can get 4% annual returns elsewhere (relevant interest rate), then the asset returning 20,000 per year is worth 20,000 / 0.04 or 500,000.

In other words, 20,000 is 4% of the asset's present value and 500,000 is 100% if its present value.


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