Billy Bob Wants to Convert His Farm into a Ski

question 69

Essay

Billy Bob wants to convert his farm into a ski resort. He asked you to determine his rate of return based on the following estimates.
- Development cost for each of the first 2 years, $87 000.
- Construction of a chalet in Year 3, $1 240 000.
- Upon his retirement in fifteen years, improvements in the property will yield him $270 000.
- Net returns from the operation of the golf course will be nil for the first three years and $200 000 per year afterwards until his retirement.

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Definitions:

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