4. Estimates indicate that a timber tract will yield an annual profit of P5,000,000 for 10 years, after which the timber will be exhausted. The land can then be sold for P600,000. If a prospective purchaser wishes to earn 12% on his investment and can deposit money in a sinking fund at 6%, determine the maximum price he should pay for the tract
4. Estimates indicate that a timber tract will yield an annual profit of P5,000,000 for 10 years, after which the timber will be exhausted. The land can then be sold for P600,000. If a prospective purchaser wishes to earn 12% on his investment and can deposit money in a sinking fund at 6%, determine the maximum price he should pay for the tract
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 13P
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