Closing Case Chapter 9 - (1+.10)35-1=2,710.24% The value of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Closing Case Chapter 9 Bunyan Lumber, LLC The initial cost of the land, an opportunity cost, is: 7,500($1,000)=$7,500,000 The first cash flow is the thinning. The next will occur 20 years from today, 25 years after the first harvest and 35. Thinning cash flow is: 7500(1,200)- $9,000,000 Thinning and subsequent harvesting cash flows occur on a 20 year interval,we ned the effective 35 year interest rate
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: (1+.10)35-1=2,710.24% The value of all thinning beginning in the second year at year 25 is: PV=7,500,000 + 9,000,000/27.1024= $78,320,739.12 Value of thinning today: N= 20 I/Y= 10% PV= 320,739.12 FV= $78,320,739.12 Revenue and costs Revenue Tractor Road Sale prep Income statement Revenue Tractor Cost Road Sale Prep & admin Excavator Broadcast Site Prep Planting EBIT Taxes Net Income...
View Full Document

This note was uploaded on 07/12/2009 for the course FINANCE BUS650 taught by Professor Rayford during the Spring '09 term at Ashford University.

Ask a homework question - tutors are online