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North Woods Paper Company owns 600 acres of forest.The company plans to cut 100 acres of trees and sell them to a lumber yard.If it
North Woods Paper Company owns 600 acres of forest.The company plans to cut 100 acres of trees and sell them to a lumber yard.If it cuts the trees today, they will be worth $2.2 million. If the trees are allowed to grow for a further year, they will be worth 30% more, however, there will be additional costs of $528,000 incurred one year from today. If the interest rate is 7%, should North Woods cut the trees today or allow them to grow for another year and cut them one year from today?
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