11.20 4 Application of EAC 1) Computing the value of land Mr. Smith owns a track of timberland with 3-year old trees standing every 5 years. The cost of planting trees is $20,000 and 5-year old trees can be sold for $100,000. If the required rate of return is 10%, what is the price of the 3-year old trees and the land? on it. Trees are planted and harvested 2) Deciding when to replace an existing machine You are operating year and $4,000 next year. After that it will give up the ghost. You can machine, which costs $15,000 but is much more efficient and will provide a cash inflow of $8,000 a year for 3 years. You want to know whether you should replace your equipment now or wait two years. Assume that the required rate of return is 6%. elderly machine that is expected to produce a net cash inflow of $4,000 in the coming an replace it now with a new