Answer to Question #209534 in Economics for Ali

Question

A paper company paid $4,00,000 at the start of a project to clear an area of land and plant some young pine trees. The trees will mature in 10 years, at that time what will be the value of forest?

If these costs will be incurred for plantation and clear the land:

They required $20,000 at the start of every year for medicine and spray for the land

Salaries of the gardeners’ $10,000 paid at the end of each year 

Required: What should be the value of the forest if interest rate is 15%?

Answer 1

$$(4,000,000+10(20,000+10,000)\times(1+0.15)^{10}=17,395,898.3$$