Save the trees Incorporation the dilemma continues...

Save the tees incorporation is doing pretty well after its incorporation. The company has a planting of 10,000 three-year-old rosewood trees. The trees are now six feet tall on average and can be sold for $24 each. At present, the eight-foot trees are priced at $34, and the 10-foot trees at $40. Landscape contractors avoid trees larger than 10 feet because they are difficult to transplant successfully. With average weather, the six-foot-tall trees will be 8 feet tall in another three years and 10 feet tall in another six years.

The CEO has to make a decision almost every day. Todays decision involves present value and future value computations that he learned at SP Jain. He wants to know whether he should sell the trees immediately at six feet tall, three years from now at 8 feet tall, or six years from now at 10 feet tall.

Size	Age	Current market value
6	3 years	$24
8	6 years	$34
10	9 years	$40

1. Because of inflation, the CEO expects the price at which he can sell the trees to increase by 3% per year. What price does he expect to receive if he keeps the trees until they reach 8 feet or 10 feet?

2. If CEO discounts the future price of the trees by 10% per year, what is the present value of their future prices?

3. Using time value of money equations, compute the growth rate of the trees between the third and the sixth year and between the sixth and the ninth year.
4. When should CEO sell the trees?