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April 16, 2014

Homework Help: college

Posted by Gibbons on Monday, June 21, 2010 at 8:17am.

A company is considering the purchase of a forest that is estimated to yield an annual return of $50,000 for 10 years, after which the forest will have no value. The company wants to earn 8% on its investment and set up a sinking fund to replace the purchase price. If the money is placed in the fund at the end of each year and earns 6% compounded annually, find the price the company should pay for the forest.

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