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need help to decide whar is best 1) (20 points) You are a landowner in Brazil. Your land backs up to the Amazon rainforest. You
need help to decide whar is best
1) (20 points) You are a landowner in Brazil. Your land backs up to the Amazon rainforest. You are trying to decide the most profitable (highest return) use for your land in the future and are presented with three choices. a. Sell your land today b. Invest in cattle production c. Invest in rubber production There is no cost to sell your land today. You will receive the benefits of selling your land today. There is a cost to invest in cattle production and rubber production. You will see the benefits of cattle and rubber production into the future. The costs and benefits of the three operations are shown in the table below. Assume that you are only concemed with profitability over the next 5 years (4 years + this year). Assume an interest/discount rate of 10%. For simplicity and consistency, round to three decimals through your calculations. Costs Year 0 Year 5 Year 1 (t=0) Year 2 0 1000 0 800 0 Sell land Invest cattle Invest rubber Year 3 0 0 0 0 0 0 Benefits Sell land Invest cattle Invest rubber Year 1 (0) Year 2 1000 0 0 800 0 500 Year 3 0 800 500 Year 4 0 800 500 Year 5 0 800 500 What is your most profitable option? Be sure to convert all values to present time Step by Step Solution
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