investments_SIMPLEForest Practice.pdf + Fit to page ID Page view Suppose you live in the coastal foothills and have 10 hilly acres suitable for growing timber. To plant would require an initial investment of $5000. You plan to harvest the trees to sell for pulp wood after 10 years, netting a return of $10000. There are no additional costs/returns. Assume you choose a discount rate of 7%. 1. What does the discount rate account for (generally speaking)?! 2. Write out the net return schedule and present values for this investment in the table below: Year Net Return Present Value NON- 09 3. Write out the full NET Present Value formula for this investment. 4. What is the NPV of the investment? 5. Based on the discount rate you chose (7%), would you undertake the investment? Why or why not? 6. Suppose you had to buy a $500 permit in the fifth year of the investment is the Investment still worth it? Why or why not