A furniture company buys a forest to obtain wood for manufacturing furniture. The related costs to the forest are: Cost of buying the forest = $730,000,000 Wood expected to be extracted = 400,000 ton Cost of restoration of the forest = $120,000,000 Residual/salvage value = $233,000,000 Trees cut in year 1 = 107,000 tons Trees cut in year 2 = 89,000 tons Compute the depletion rate and depletion charge for the first 2 years.

A furniture company buys a forest to obtain wood for manufacturing furniture. The related costs to the forest are: Cost of buying the forest = $730,000,000 Wood expected to be extracted = 400,000 ton Cost of restoration of the forest = $120,000,000 Residual/salvage value = $233,000,000 Trees cut in year 1 = 107,000 tons Trees cut in year 2 = 89,000 tons Compute the depletion rate and depletion charge for the first 2 years.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2E

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