You grow poplar trees. The lumber yard purchases cut trees from you. The trees grow 1 foot per year. Assuming a constant real price per foot for poplar and a real interest rate of 3%, would you sell a 20-foot tree today?

What will be an ideal response?


Do not sell yet. The tree is growing at a 5% rate. Selling the tree and putting the proceeds in the bank would only yield 3%. Wait until the tree is 33.33 feet tall.

Economics

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What will be an ideal response?

Economics