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You have been hired by Agirich Appraisal

Economics

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You have been hired by Agirich Appraisal. You next assignment is to provide the indicated value for a subject property using the Income Capitalization Approach. Your assignment is to use the following information to derive a final value conclusion for the subject property. Subject property has 200, 80, 80, 370, 5, and 5 acres of Wheat, Corn, Beans, Ryegrass, Buildings and Roads, respectively. It is estimated that building can be rented for $1,400/month. Insurance is estimated to be $1,200. You have two farms that have sold that are similar to the subject property. Property A has 200, 80, 100, 300, 3, and 5 acres of Wheat, Corn, Beans, Ryegrass, Buildings and Roads, respectively. Buildings were rented for $1,200/month. Insurance was $1,050. It sold for $2,188,809. Property B has 100, 60, 160,500, 2, and 5 acres of Wheat, Corn, Beans, Ryegrass, Buildings and Roads, respectively. Buildings were rented for $800/month. Insurance was $1050. Property B was sold for $2,789,526. Analysis of the area shows that Rent for roads is 0, property taxes are $2/acre, and management fees are 5% of the Total Gross Revenue. The yield for wheat, corn, beans, and ryegrass are 130 bushels, 10 ton, 7.6 ton and 1825 pounds per acre, respectively. The price of wheat, corn, beans, and ryegrass are $4.50/bushel, $80/ton, $200/ton, and 20 cents/pound, respectively. The owner share of gross revenue for wheat, corn, beans, and ryegrass are 20%, 20%, 20%, and 25%, respectively. It is estimated that fertilizer and chemical costs per acre for wheat, corn, beans, and ryegrass are $50, $100, $250 and $10, respectively. The owner share of the fertilizer and chemical costs is 20% for wheat, corn and beans. It is 0 for ryegrass. Agricultural Economics 432 Grading Key for Assignment 10 Category Total Points Possible Point earned Derivation of Capitalization Rate 25 Application of Capitalization Rate to Subject Property 20 Presentation (Spreadsheet quality, typed, professional) 35 Overall Effort and Quality 20 Total 100