A farmer uses a piece of land with the following accounting costs to grow a crop

Question

A farmer uses a piece of land with the following accounting costs to grow a crop worth $1800. If a normal rate of return is $100 on such an investment, what will the value of the land be for use during this time period?                                                                                        

$150 for seed              $100 for fertilizer                   $80 for herbicides

$20 for water              $150 for labor                                    $600 for equipment

$100 for fuel               $200 for taxes

Explanation / Answer

1. total investment = 1400$;

revenue generated = $1800;

return = 100$;

remaining cost is the cost of alnd i.e =1800 -(1400);

=300$ ;

return = 100$

so cost of land = 200$

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