Q7. 15 pts total Assume you are considering the purchase of a heifer that will provide an estimated annual net benefits of $190 per year for the next six years. At the end of the sixth year, you can sell her as a cull for $700. You have a 6.5% discount rate. a. What is the present value of the $190 of annual net benefits you assume to receive for the next 6 years? (Hint, treat the annual net return as an annuity since you expect to receive $190 every year for the next 6 years). 5 pts b. What is the present value of her $700 cull save value in 6 years? (Hint: treat her cull sale as a lump sum you expect to receive one time in 6 years). 5 pts c. What is the maximum you're willing to pay for a heifer today? (Hint: Add the PV her annual net return and the PV of her cull sale value). 3 pts d. Heifers at a local purebred ranch sale went for $1,400 last year. Assuming their heifers provide the same annual net benefit for six year and be sold as a cull at $700, can you afford to buy a heifer from this producer? 2 pts