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A company owns a tract of timber that will keep growing for a number of years. It calculates that the timbers value less the cost
A company owns a tract of timber that will keep growing for a number of years. It calculates that the timbers value less the cost of harvesting is currently $50,000 and that this figure will grow by 10% in the next year and by 5% in the following year. If the cost of capital is 8% p.a., when should the company harvest the timber?
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