Question: Need help with a and b. 1. Present value and investment A farm raising trees for construction lumber learns about a potential investment oppor- tunity.

Need help with a and b.

Need help with a and b. 1. Present value and investment A

1. Present value and investment A farm raising trees for construction lumber learns about a potential investment oppor- tunity. The rm hears that a new treatment applied once to young crops may increase yield. This treatment not only accelerates the tree's growth but also increases the resistance to pests. The expected increase in output is an additional 5.000 linear feet of timber to each acre of crop when the trees are harvested in 20 years. This additional output is estimated to increase revenues by $100,000.00 after each acre is harvested and sold. The cost of the treatment is $10,000.00 per acre. other things being equal. Using the information provided in the statement above: a. What is the Marginal Revenue {MR}, Marginal Product (MP}. future value of Marginal Revenue Product {mrp} Marginal Resource Cost {mrc}, and Term {t} of this possible investment? b. Find the Present Value [V13] of this investment at the rates of 5%. 10%. and 15%. at which rate{s) would you advise the rm to make the investment? Why

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