Assignment:
You have enough land to grow one tree. The height of your tree (in feet) equals 100 ( squareroot of age of the tree) The cost of cutting down the tree is $0. The interest rate is 4%, and the price of one foot of the tree is $16.
Q1. What is your optimal cutting strategy? Your goal is to maximize the PDV of profits.
Q2. Ecotourists from Berkeley are willing to pay you $x dollars each year to look at your tree. Write out an equation for X so that you are indifferent between: 1) having the ecotourists visit and 2) harvesting the tree and sacrificing the ecotourism payment.
Provide complete and step by step solution for the question and show calculations and use formulas.