Question
A -you found a parcel of well-managed forest land that can sustainably produce $100/acre/year of timber income in perpetuity. What is your maximum willingness to
A -you found a parcel of well-managed forest land that can sustainably produce $100/acre/year of timber income in perpetuity. What is your maximum willingness to pay for the land, assuming a 5.5% discount rate and you need to justify your purchase price solely on its ability to generate timber income?
b-You have two possibilities for generating revenue from your wetlands. The first possibility is to lease your land to a local hunting club in return for 15 annual payments of $200 per acre. The other possibility is to enroll the land in a conservation program and receive $100 per acre every other year for a total of 10 payments. With both possibilities, you would receive the first payment immediately. Which option is the most financially attractive to you if your ARR is 5 percent?
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