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An acre planted with walnut trees is estimated to be worth $18,000 in 24 years. If...

An acre planted with walnut trees is estimated to be worth $18,000 in 24 years. If you want to realize a 14 percent rate of return on your investment, how much can you afford to invest per acre? (Ignore all taxes and assume that annual cash outlays to maintain your stand of walnut trees are nil.) Use Table I to answer the question. Round your answer to the nearest cent.

please use fin calculator

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Answer #1

Information provided:

Future value= $18,000

Time= 24 years

Yield to maturity= 14%

The question is solved by computing the present value.

Enter the below in a financial calculator to compute the present value:

FV= 18,000

I/Y= 14

N= 24

Press the CPT key and PV to compute the present value.

The value obtained is 775.45.   

Therefore, I can afford to invest $775.45.

In case of any query, kindly comment on the solution.

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