Farmer Sam's farm is in a hilly section of the state. Erosion has always been a problem, but in recent years it has caused a decline in yields. Over the next 5 years, he expects that his profits per acre will fall as seen in the following table. He is considering putting in terraces, which would stop the erosion and hold profits at $10 per acre, If he doesn't pay for terracing, he will put the money in the bank and earn 3% interest per year. What is the present value of profits per acre with and without terracing? Show your math or spreadsheet calculations for each of the 5 years. Year Profits per Acre WITHOUT Terracing Profits per Acre WITH Terracing $10 1 $10 $9 $10 3 $8 $10 4 $7 $10 $6 $10
Farmer Sam's farm is in a hilly section of the state. Erosion has always been a problem, but in recent years it has caused a decline in yields. Over the next 5 years, he expects that his profits per acre will fall as seen in the following table. He is considering putting in terraces, which would stop the erosion and hold profits at $10 per acre, If he doesn't pay for terracing, he will put the money in the bank and earn 3% interest per year. What is the present value of profits per acre with and without terracing? Show your math or spreadsheet calculations for each of the 5 years. Year Profits per Acre WITHOUT Terracing Profits per Acre WITH Terracing $10 1 $10 $9 $10 3 $8 $10 4 $7 $10 $6 $10
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Farmer Sam's farm is in a hilly section of the state. Erosion has always been a problem, but in recent years it has
caused a decline in yields. Over the next 5 years, he expects that his profits per acre will fall as seen in the following
table. He is considering putting in terraces, which would stop the erosion and hold profits at $10 per acre. If he
doesn't pay for terracing, he will put the money in the bank and earn 3% interest per year.
What is the present value of profits per acre with and without terracing? Show your math or spreadsheet
calculations for each of the 5 years.
Year
Profits per Acre
WITHOUT Terracing
Profits per Acre WITH
Terracing
$10
1
$10
$9
$10
3
$8
$10
4
$7
$10
$6
$10](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F035c65e1-f028-4bdb-acf9-ac7c64b98962%2F6036d5a1-f1eb-4f8e-8090-327869517e95%2F47aw2d_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Farmer Sam's farm is in a hilly section of the state. Erosion has always been a problem, but in recent years it has
caused a decline in yields. Over the next 5 years, he expects that his profits per acre will fall as seen in the following
table. He is considering putting in terraces, which would stop the erosion and hold profits at $10 per acre. If he
doesn't pay for terracing, he will put the money in the bank and earn 3% interest per year.
What is the present value of profits per acre with and without terracing? Show your math or spreadsheet
calculations for each of the 5 years.
Year
Profits per Acre
WITHOUT Terracing
Profits per Acre WITH
Terracing
$10
1
$10
$9
$10
3
$8
$10
4
$7
$10
$6
$10
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