5.You own 500 acres of timberland, with young timber worth $40,000 if logged now. This,represents 1,000 cords of wood worth $40 per cord net of costs of cutting and hauling.,Apaper company has offered to purchase your tract for $140,000. Should you accept the,offer? You have the following information:,,Yearly Growth Rate,Years of Cords per Acre,1–4 16%,5–8 11,9–13 4,14 and subsequent years 1,You expect price per cord to increase at 4 percent per year indefinitely.,• The cost of capital is 9 percent. Ignore taxes.,• The market value of your land would be $100 per acre if you cut and removed the,timber this year. The value of cut-over land is also expected to grow at 4 percent,per year indefinitely,
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