Question
Richards' Tree Farm, Inc., is doing well after its incorporation. Jake Richards, president, chief of operations, and majority shareholder, currently has a planting of 10,000
Richards' Tree Farm, Inc., is doing well after its incorporation. Jake Richards, president, chief of operations, and majority shareholder, currently has a planting of 10,000 three-year-old Japanese dogwood trees in a recently introduced pink-flowered variety. This type of tree can be sold at a higher price than the more common white-flowered variety. The trees are now 6 feet tall on average and can be sold for $24 each. At present, 8-foot trees are priced at $34 and 10-foot trees at $40. Landscape contractors avoid trees larger than 10 feet tall because they are difficult to transplant successfully. With average weather, the 6-foot trees will be 8 feet tall in another three years and 10 feet tall in six more years.
Jake has to make financial decisions almost everyday. Today
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