The pro forma projections for growing a 20-hectare ginseng crop require the expenditure of $150,000 in the summer that the crop is planted and an additional $50,000 in each of the next two summers to cultivate and fertilize the growing crop. After payment of the costs of harvesting the crop, the profit should be $200,000 in the third summer after planting, and $300,000 in the fourth summer. Allowing for a cost of capital of 15% compounded annually, what is the economic value of the project at the time of planting? (Hint: The project's economic value is its NPV.)

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The Answer of The pro forma projections for growing a 20-hectare ginseng crop require the expenditure of $150,000 in the summer that the crop is planted and an additional $50,000 in each of the next two summers to cultivate and fertilize the growing crop. After payment of the costs of harvesting the crop, the profit should be $200,000 in the third summer after planting, and $300,000 in the fourth summer. Allowing for a cost of capital of 15% compounded annually, what is the economic value of the project at the time of planting? (Hint: The project's economic value is its NPV.)

The Pro Forma Projections for Growing a 20-Hectare Ginseng Crop