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During the past year, Stacy McGill planted a new vineyard on150acres of land that she leases for $30,000a year. She has asked you, as her accountant, to assist her in determining the value of her vineyard operation.

The vineyard will bear no grapes for the first5years (15). In the next5years (610), Stacy estimates that the vines will bear grapes that can be sold for $60,000each year. For the next20years (1130), she expects the harvest will provide annual revenues of $110,000. But during the last10years (3140) of the vineyards life, she estimates that revenues will decline to $80,000per year.

During the first5years, the annual cost of pruning, fertilizing, and caring for the vineyard is estimated at $9,000; during the years of production, 640, these costs will rise to $12,000per year. The relevant market rate of interest for the entire period is6%. Assume that all receipts and payments are made at the end of each year.

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Dick Button has offered to buy Stacys vineyard business by assuming the 40-year lease. On the basis of the current value of the business, what is the minimum price Stacy should accept? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Minimum price at which Stacy should accept the business

$

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