A furniture company buys a forest to obtain wood for manufacturing furniture. The related costs to the forest are: Cost of buying the forest = $730,000,000 Wood expected to be extracted = 400,000 ton Cost of restoration of the forest = $120,000,000 Residual/salvage value = $233,000,000 Trees cut in year 1 = 107,000 tons Trees cut in year 2 = 89,000 tons Compute the depletion rate and depletion charge for the first 2 years.
A furniture company buys a forest to obtain wood for manufacturing furniture. The related costs to the forest are: Cost of buying the forest = $730,000,000 Wood expected to be extracted = 400,000 ton Cost of restoration of the forest = $120,000,000 Residual/salvage value = $233,000,000 Trees cut in year 1 = 107,000 tons Trees cut in year 2 = 89,000 tons Compute the depletion rate and depletion charge for the first 2 years.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A furniture company buys a forest to obtain wood for manufacturing furniture. The related costs to the
forest are:
Cost of buying the forest = $730,000,000
Wood expected to be extracted = 400,000 ton
Cost of restoration of the forest = $120,000,000
Residual/salvage value = $233,000,000
Trees cut in year 1 = 107,000 tons
Trees cut in year 2 = 89,000 tons
Compute the depletion rate and depletion charge for the first 2 years.
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