1. Roy Rogers owns land in Western Montana. He must decide whether to plant wheat or raise cattle. Assume r = 10%.

a) If he plants wheat, he can only get a harvest every 2 years. He must pay $2000 every odd year to plant his wheat, and he receives $23,000 every even year after the harvest. So 1 year from today he pays $2000, 2 years from today he receives $23,000, and so forth. What is the value of the land as a wheat farm?

b) If Roy raises cattle, he buys 1 year old cattle for $4,000, and later sells them for $70,000. He then buys more 1 year old cattle to sell in another 5 years. What is the value of Roy's land if it is a cattle ranch?

c) Should Roy Rogers become a cowboy or a farmer?