Problem #2 Part one: Is the following opportunity a good deal? You have the chance to buy a plantation that is halfway through its 40-year cycle. The previous owner has been using the following plan: Cost per acre Planting and site prep at year O $220 Fertilizer at year I and year 2 $30 Pre-commercial thinning (PCT) at year 17-$125 Fire protection annually = $3 Insect protection every 5 years=$14 Revenue per acre: Commercial thinning at year 30 = $400 Harvest at year 40 = $2700 You have a second opportunity that would earn a 6% rate of return. Part two: Would it be better if the owner had chosen the following instead? (Same problem as above, just use the following costs and revenues instead) Cost per acre: Planting and site prep at year 0 = $220 Revenue per acre: Harvest at year 40: $2263