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Business, 10.11.2019 04:31 debramknoxx

Alocal tree farm is trying to decide which fertilizer to use to grow its trees. it can either buy the famous greenwood fertilizer, which costs $5 and can grow a tree which can be sold for $8 in 2 years, or it can buy brian and peter’s fertilizer which costs $4 and can grow a tree which can be sold for $10 in 5 years.
1. what is the npv of each option given an annual effective interest rate of 5%? (5 points)
2. what is the rate of return of each option? which option should the tree farm pick assuming an infinite time horizon? why?

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