Present value of the investment in forest management

Assignment Help Financial Management

Reference no: EM131522474

You work for a private land management consulting firm. A client has requested a financial feasibility study on the purchase of forest land. You determine a forest management investment of $300 per acre would be required one year after the property is purchased. You estimate $1,800 per acre in timber harvesting revenue will be generated every 10 years in perpetuity beginning in 20 years. Annual property taxes of $5 per acre will begin immediately when the land is purchased. Your client’s opportunity cost of capital for this project is 9.5 percent.

1-What is the per acre present value of the investment in forest management?

2-What is the per acre present value of the timber harvesting revenue?

3-What is the per acre present value of the annual property taxes?

4-What is the maximum price per acre you would advise your client to pay for the property based on its ability to produce timber income?

Reference no: EM131522474

Questions Cloud

How far can share price fall before margin call triggered : How much must you invest initially to purchase shares-what is amount you borrow from your broker? How far can share price fall before margin call triggered?

Find the efficient mix of precautionary actions : Now we add to the problem the possibility of precaution by the victims. Find the efficient mix of precautionary actions. (optional)

Calculate inventory turnover ratio : The balance sheet for Plasma Screens Corporation and additional information are provided below.

Formulate the problem of finding the widths and diameters : Formulate the problem of finding the widths and diameters of the steps for minimum weight - Design widths and diameters to minimise the weight

Present value of the investment in forest management : You work for a private land management consulting firm. What is the per acre present value of the investment in forest management?

Develop the significance and background of the idea : Develop the significance and background of the idea, and then describe the methodology that the researcher will use.

Investment project provides cash inflows : An investment project provides cash inflows of $1,350 per year for eight years. What is the project payback period if the initial cost is $4,250?

Write a brief summary of governments findings about disease : Write a brief summary of the government's findings and investigations about your chosen disease. Past and ongoing research pertaining to your chosen disease.

Calculate the given risk ratios for given year : When we compare two companies, can one have a higher return on assets while the other has a higher return on equity? Explain your answer.

User Account

All Pages