2. You are considering purchasing land to grow successive even aged crops of merchantable timber lasting forever. The trees are currently 60 years old. Each rotation involves the following costs and benefits Planting costs at the beginning of each rotation are $15000 At age 55. the stand undergoes commercial thinning generating net revenue of $50000 The rotation age is 80 years, and the stumpage value is $220000 The stand also requires an annual management cost of $383 per year You require a 3% return on investment (real rate compounded annually) a) What is the most that you would be willing to pay for this land given the trees are 60 years old? Show your time line and calculation (6 marks) b) Suppose that this land is for sale for $100502.86 Find the internal rate of return on this investment assuming that you are going to follow growing successive even aged crops of merchantable timber lasting forever. Use an iterative process to find the internal rate of return to the nearest 3 decimal places. Show the equation that you are trying to solve (4 marks) 2. You are considering purchasing land to grow successive even aged crops of merchantable timber lasting forever. The trees are currently 60 years old. Each rotation involves the following costs and benefits Planting costs at the beginning of each rotation are $15000 At age 55. the stand undergoes commercial thinning generating net revenue of $50000 The rotation age is 80 years, and the stumpage value is $220000 The stand also requires an annual management cost of $383 per year You require a 3% return on investment (real rate compounded annually) a) What is the most that you would be willing to pay for this land given the trees are 60 years old? Show your time line and calculation (6 marks) b) Suppose that this land is for sale for $100502.86 Find the internal rate of return on this investment assuming that you are going to follow growing successive even aged crops of merchantable timber lasting forever. Use an iterative process to find the internal rate of return to the nearest 3 decimal places. Show the equation that you are trying to solve (4 marks)