3.1 You are a manager at a firm like Terrapin Ridge Farms, a company that produces dressings, dips, sauces, and jams. One of the jams is strawberry and fig. Currently, your company buys 20,000 pounds of strawberries from local farmers at a price of $2.00 per pound. One local farmer has offered you the chance to buy a strawberry farm for an immediate payment of

$25,000. This farm will produce the 20,000 pounds you need. You calculate that if you buy the farm, a pound of strawberries will cost you

$0.80. Suppose that your discount rate is 8 percent per year and you plan to retain ownership of the farm for 24 years, at the end of which time you will sell it at a price of $60,000. Assume that whether or not you buy the strawberries or grow them, you pay the costs at the end of the year. Should you recommend that the owners of your firm buy the farm? Why or why not?