What is the present value of the additional costs

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Reference no: EM131518154

You own forest land in California. You estimate that California’s forest practice regulations will impact you financially in the following ways:

-Cost of a forest management plan is $100 per acre, to be obtained immediately.

-Additional harvesting cost to comply with the regulations: $250 per acre.

-Value of timber left standing after harvest to comply with regulations: $700 per acre.

-You plan to conduct two timber harvests: one five and another eight years from now.

-All costs and timber prices increase at the rate of inflation and are 2012 values.

-Your opportunity cost (in real terms) is 6 % per year.

What is the present value of the additional costs of California’s forest practice regulations?

Reference no: EM131518154

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