What is the present value of investment

Assignment Help Financial Management
Reference no: EM131509274

You purchased bare land for $500 per acre as an investment to supplement your retirement income. After three years, you plan to reforest the property at a cost of $400 per acre. You estimate your income from selective timber harvesting will be $5,000 per acre beginning 25 years after the trees are planted and occurring every 10 years thereafter in perpetuity. You have annual property taxes of $2 per acre starting next year. What is the present value of this investment, assuming a 4 percent discount rate?

Reference no: EM131509274

Questions Cloud

Describe the methods for establishing component priorities : Describe the methods for establishing component priorities.Describe the methods for determining component reliance and dependencies.
Explain valuation and sensitivity analysis about jb hi-fi : Need financial, forecasting, valuation and sensitivity analysis about JB HI-FI. Do not use historical averages to forecast the company's future
Centralized clearing in exchange traded and otc products : Compare and contrast centralized clearing between exchange traded and OTC products.
Depreciation of the dollar relative to the euro : Is Bank USA exposed to an appreciation or depreciation of the dollar relative to the euro?
What is the present value of investment : What is the present value of this investment, assuming a 4 percent discount rate?
What is the irr of the after-tax cash flows for each company : What is the IRR of the after-tax cash flows for each company? What does comparison of the IRRs suggest is the effective corporate tax rate?
What lasting impact do you think social media will have : What lasting impact do you think social media will have on our society going forward?
Which did you find easier to build and debug : Using Visual Studio C++, Build a templated max heap using a linked implementation. Insert 100 unique random int's into the heap. Display the heap.
Analyze the hound of the baskervilles : Analyze ' The Hound of the Baskervilles' by Sir Arthur Conan Doyle according to the scidentific method and formalism.

Reviews

Write a Review

Financial Management Questions & Answers

  Loan balance exceeds the value of the home

You are 62 years old, and your house appraises for $450,000. A bank is willing to give you a reverse mortgage at 50% LTV with a 6% fixed contract rate. You choose an option to receive equal monthly payments over a period of 10 years. If the home appr..

  Increase the speed of bottling and save money

The Pan American Bottling Co. is considering the purchase of a new machine that would increase the speed of bottling and save money.

  The bankers recommend a debt issue with gross proceeds

DiPitro's Paint and Wallpaper, Inc., needs to raise $1.13 million to finance plant expansion. In discussions with its investment bank. DiPitro's leams that the bankers recommend a debt issue with gross proceeds of $1,000 per bond and they will charge..

  What must the beta of this stock be

A stock has an expected return of 14.6 percent, the risk-free rate is 5.70 percent, and the market risk premium is 7.3 percent. Required: What must the beta of this stock be?

  What is moda textile factory''s competitive advantage?

What is Moda Textile Factory's competitive advantage?

  Project is expected to create operating cash flows

A project is expected to create operating cash flows of $30,000 a year for three years. The initial cost of the fixed assets is $62,000. These assets will be worthless at the end of the project. An additional $5,000 of net working capital will be req..

  What is the total cost savings can be realized

Company A, a low rated rm, desires a xed rate, long term loan. Company A currently has access to oating-rate funds at a margin of 1.2% over LIBOR. Its direct borrowing cost is 13% in the fixed rate bond market. What's the total cost savings can be re..

  What is the cost of the origination fee in dollar terms

Let’s assume that you have just taken out a mortgage loan for $200,000 with an origination fee of 2 points due upfront. The mortgage term is 30 years and the mortgage rate is fixed at 4%. What is the cost of the origination fee in dollar terms?? How ..

  The fixed overhead spending variance is also called

The fixed overhead spending variance is also called the ________ variance.

  The current set of spotinterest rates with one

The current set of spotinterest rates with one, two, three and four years to maturity are 4%, 6%, 7% and 7.5% respectively.

  Manufacturer of energy-efficient lighting solutions

Gardial green light, a manufacturer of energy-efficient lighting solutions, has had such success with it new products that it is planning to substantially expand its manufacturing capacity with a 15 million investment in new machinery. how much exter..

  How much can randall deduct due to these losses

Randall owns 800 shares in Fabrication, Inc., an S corporation in Moss Hill, Texas. In 2014, the basis in his stock is $30,000, before the adjustment for this year’s losses. During 2014, Randall’s share of the corporation’s ordinary loss is $20,000, ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd