Chapter 4 The Value of Common Stocks

You own 100 acres of timberland, with young timber worth $20,000 if logged today. This represents 500 cords of wood at $40 per cord. After logging, the land can be sold today for $10,000 ($100 per acre). The opportunity cost of capital is 10%. You have made the following estimates: (i) The price of a cord of wood will increase by 5% per year. ................
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