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P5.6B During the past year, Stacy Clark planted a new orange grove on 250 acres of land that she leases for $45,000 a year. She
P5.6B During the past year, Stacy Clark planted a new orange grove on 250 acres of land that she leases for $45,000 a year. She has asked you, as her accountant, to assist her in determining the value of her orange grove operation. The orange grove will bear no oranges for the first 4 years (1-4). In the next 6 years (5-10), Stacy estimates that the trees will bear oranges that can be sold for $154,000 each year. For the next 15 years (11-25), she expects the harvest will provide annual revenues of $260,000. But during the last 15 years (26-40) of the orchard's life, she estimates that revenues will decline to $170,000 per year. During the first 4 years, the annual cost of pruning, fertilizing, and caring for the orchard is estimated at $26,000; during the years of production, 5-40, these costs will rise to $48,000 per year. The relevant market rate of interest for the entire period is 10%. Assume that all receipts and payments are made at the end of each year
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