You need to invest in new equipment and get a section of your land certified as organic and don't expect your this section will earn anything over the first five years of this process. Because of a licensing agreement with a local supermarket, you expect to that in 5 years the section will net $150 per acre for 6 years (assume it pays nothing in years 1-4, begins paying $150 at end of year4=start of year 5). You don't know if the contract will be resumed after the 6 years so conservatively assume that you will get $20 per acre forever after that (in other words beginning in year 11). Assume a 1% WACC (discount rate). What is the PV of the net income stream? Group of answer choices $2645.97/acre $835.40/acre $1810.57/acre $2000/acre none of these
You need to invest in new equipment and get a section of your land certified as organic and don't expect your this section will earn anything over the first five years of this process. Because of a licensing agreement with a local supermarket, you expect to that in 5 years the section will net $150 per acre for 6 years (assume it pays nothing in years 1-4, begins paying $150 at end of year4=start of year 5). You don't know if the contract will be resumed after the 6 years so conservatively assume that you will get $20 per acre forever after that (in other words beginning in year 11). Assume a 1% WACC (discount rate). What is the PV of the net income stream?
Group of answer choices
$2645.97/acre
$835.40/acre
$1810.57/acre
$2000/acre
none of these
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