It is estimated that a timber tract will yield an annual profit of P100,000 for 6 years, at the end of which time the timber will be exhausted. The land itself will then have an anticipated value of P40,000. If a prospective purchaser desires a return of 7 % on his investment and can deposit money in a sinking fund at 4 %, what is the maximum price he should pay for the tract?
It is estimated that a timber tract will yield an annual profit of P100,000 for 6 years, at the end of which time the timber will be exhausted. The land itself will then have an anticipated value of P40,000. If a prospective purchaser desires a return of 7 % on his investment and can deposit money in a sinking fund at 4 %, what is the maximum price he should pay for the tract?
Chapter2: Loads On Structures
Section: Chapter Questions
Problem 1P
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It is estimated that a timber tract will yield an annual profit of
P100,000 for 6 years, at the end of which time the timber will be exhausted. The land itself will then have an anticipated value of P40,000. If a prospective purchaser desires a return of 7 % on his investment and can deposit money in a sinking fund at 4 %, what is the maximum price he should pay for the tract?
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