Business, 12.03.2021 14:50, thatonestudent2271

Buyers would pay exactly $175 per acre for the teak today. In one year, however, that wood will be perfectly matured. Buyers will be willing to pay $220 per acre. The trees will be past their peak after that and will start to lose their value. From now until one year from now, the oakwill have the exact same value per acre as the teak. The difference is that the oak will continue to increase in value by $10 per acre per year for the next 30 years. To be clear, an acre of oak is worth $175 today, $220 in a year, $230 in two years, and so on. The maple is currently cheaper. It runs $100 and acre right now. One year from now, it will be worth $250 per acre, and that amount will rise by $50 per acre per year for the next 20 years.

Required:
a. What is the most Maria would be willing to pay per case for an acre of teak?
b. What is the most Maria would be willing to pay per acre of oak?
c. How old will the maple be when it first becomes worthwhile for investors to sell off their holdings?

Answers: 2

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Buyers would pay exactly $175 per acre for the teak today. In one year, however, that wood will be p...