The foUowing perpetual sequences of revenues and costs are predicted for an acre of bare, previously forested land. Harvest revenue is $2000 in 35 years and every 35 years, thereafter; reforestation costs of $120 per acre now at year one, and every 35 years; thinning revenue of $200 at age 15 years perpetually. Assuming a 7% interest (the minimum acceptable rate of return), what is the maximum bid price you would want to bid today?The question is, what is the maximum bid price you could pay for this land per acre assuming that you wish to maximize your net present worth, you have an infinite planning horizon, and the rate of return on your next best investment is 7%. Solve to an accuracy of± $2.00 per acre. Show your work solving the problems i) $175 ii) $51.00 iii) $57 iv)None of the above
The foUowing perpetual sequences of revenues and costs are predicted for an acre of bare, previously forested land. Harvest revenue is $2000 in 35 years and every 35 years, thereafter; reforestation costs of $120 per acre now at year one, and every 35 years; thinning revenue of $200 at age 15 years perpetually. Assuming a 7% interest (the minimum acceptable rate of return), what is the maximum bid price you would want to bid today?The question is, what is the maximum bid price you could pay for this land per acre assuming that you wish to maximize your net present worth, you have an infinite planning horizon, and the rate of return on your next best investment is 7%. Solve to an accuracy of± $2.00 per acre. Show your work solving the problems i) $175 ii) $51.00 iii) $57 iv)None of the above
Applications and Investigations in Earth Science (9th Edition)
9th Edition
ISBN:9780134746241
Author:Edward J. Tarbuck, Frederick K. Lutgens, Dennis G. Tasa
Publisher:Edward J. Tarbuck, Frederick K. Lutgens, Dennis G. Tasa
Chapter1: The Study Of Minerals
Section: Chapter Questions
Problem 1LR
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The foUowing perpetual sequences of revenues and costs are predicted for an acre of bare, previously forested land.
Harvest revenue is $2000 in 35 years and every 35 years, thereafter; reforestation costs of $120 per acre now at year one, and
every 35 years; thinning revenue of $200 at age 15 years perpetually. Assuming a 7% interest (the minimum acceptable rate
of return), what is the maximum bid price you would want to bid today?The question is, what is the maximum bid price you could pay for this land per acre assuming that you wish to maximize your
net present worth, you have an infinite planning horizon, and the rate of return on your next best investment is 7%. Solve to
an accuracy of± $2.00 per acre.
Show your work solving the problems
i) $175 ii) $51.00 iii) $57 iv)None of the above
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