Question

A forest stand yields a recurring timber harvest income of $20,000 that occurs every 40 years....

A forest stand yields a recurring timber harvest income of $20,000 that occurs every 40 years. Round answers to the nearest whole number.

a) Using an 8% interest rate, find the present value of the perpetual harvest income stream assuming that the first income occurs 40 years from now.

b) Suppose the stand is 25 years old at the present time. Using the 8% interest rate, find the present value of the perpetual harvest income stream assuming that the first income occurs 15 years from now and then continues occurring in cycles of 45 years.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Kindly Upvote!

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A perpetuity will make payments of $100,000 every third year, with the first payment occurring three...
A perpetuity will make payments of $100,000 every third year, with the first payment occurring three years from now. The annual nominal interest rate convertible quarterly is 8%. Find the present value of this perpetuity. (I did this problem, just want to check if I did it correctly because the answer doesn't look right to me, not sure what I did incorrectly, I got PV = 372,800.47)
Michelle wishes to establish a university fund for her son who is currently 8 years old....
Michelle wishes to establish a university fund for her son who is currently 8 years old. Required: a. If her son will need a monthly income of $900, how much does he need to be in place at the start of his university life (ie start of first-year) so that the $900 per month is achievable? Assuming that the interest over the three years while her son is at university is 6%p.a. compounded monthly and he is paid the $900...
Michelle wishes to establish a university fund for her son who is currently 8 years old....
Michelle wishes to establish a university fund for her son who is currently 8 years old. Required: a. If her son will need a monthly income of $900, how much does he need to be in place at the start of his university life (ie start of first-year) so that the $900 per month is achievable? Assuming that the interest over the three years while her son is at university is 6%p.a. compounded monthly and he is paid the $900...
1. You want to take a vacation in 4 years and feel you’ll need $8,500 to...
1. You want to take a vacation in 4 years and feel you’ll need $8,500 to do so. If you can earn 5% on your deposits, how much will you need to deposit in each of the next four years to have the needed amount? PMT = 1972.10058   2. What is the effective annual rate on a credit card that states that their APR is 21%, compounded monthly? 23.144% 3. What is the present value of $1,000 to be received...
For an individual with a net income of $50,000, a tax liability of $10,704.50 and a...
For an individual with a net income of $50,000, a tax liability of $10,704.50 and a 29% marginal tax rate? ____ The average tax rate is 21.41% The average tax rate is 29.00% The average tax rate is undetermined, but less than the marginal tax rate The average tax rate is undetermined, but greater than the marginal tax rate A firm had an accounts receivable balance of $150 and $170 at the beginning and the end of the week, respectively....
1. John invested $20,000 fifteen years ago with an insurance company that has paid him 8...
1. John invested $20,000 fifteen years ago with an insurance company that has paid him 8 percent (APR), compounded quarterly (every 3 months). How much interest did John earn over the 15 years? a. $2,416.08 b. $45,620.62 c. $24,000.00 d. $28,318.95 e. $65,620.62 2. You are running short of cash and really need to pay your tuition. A friend suggests that you check out the local title pawn shop. At the shop they offer to loan you $5,000 if you...
2. Suppose you will receive $1,000 in 4 years. If your opportunity cost is 6% annually,...
2. Suppose you will receive $1,000 in 4 years. If your opportunity cost is 6% annually, what is the present value of this amount if interest is compounded every six months? (8 points) What is the effective annual rate? (8 points) 3. Suppose you have deposited $10,000 in your high-yield saving account today. The savings account pays an annual interest rate of 4%, compounded semi-annually. Two years from today you will withdraw R dollars. You will continue to make additional...
2. What is the duration of a $1,000, 8% coupon bond with 4 years to maturity....
2. What is the duration of a $1,000, 8% coupon bond with 4 years to maturity. Assume that all the market interest rates are 10%. * A. 4 years B. 3.56 years C. 3 years D. 3.75 years 3. If you expect the inflation rate to be 17 percent next year and a one-year bond has a yield to maturity of 8 percent, then the real interest rate on this bond is: A. 10% B. 25% C. 9% D. 8%...
1. For the next 6 years, you pan to make equal quarterly deposits of $600.00 into...
1. For the next 6 years, you pan to make equal quarterly deposits of $600.00 into an account paying 8% compounded quarterly. How much will be the total you have at the end of the time? 2. How much money will you have to deposit now if you wish to have $5,000 at the end of 8 years. Interest is to be at the rate of 6% compounded semiannually? 3. In the California “Million Dollar Lottery” a winner is paid...
4. The Mycroft Inquiries Group has a price-earnings ratio of 17.5, net income of $194,000, a...
4. The Mycroft Inquiries Group has a price-earnings ratio of 17.5, net income of $194,000, a book value per share of $22.22, and 70,000 shares of stock outstanding. What is its market to book ratio? 5.      Moriarity Ltd has adopted a policy whereby it will maintain a constant debt-equity ratio. Given this, what is its maximum growth rate if it has net income of $9,600, total equity of $66,000, total assets of $150,000 and a 30% dividend payout ratio? 6.     ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT