Reference no: EM132041781

Question

Use the information given below to determine the financially or economically-optimum age to harvest this stand using the following relationship:

(V₁ - V₀) = (V₀ - C)r + Sr

Where:

V₀ = value of timber at time 0

V₁ = value of timber at time 1

C = harvest cost

S = land sale price

r = discount rate

1-When should this stand be harvested to maximize economic value if only the timber and the land are considered (i.e., no non-market benefits are considered)?

2- When should this stand be harvested to maximize economic value if the timber, land, and wildlife values are considered?

3- If the wildlife benefit associated with an unharvested forest decreases to $10/acre/yr, identify when this stand should be harvested to maximize economic value if the timber, land, and wildlife values are considered

4- If the wildlife benefit associated with an unharvested forest is $100/acre/yr, how much additional value is gained by letting the stand grow from age 55 to 56 years compared to if you harvest the stand at age 55?

5- If the discount rate is increased to 5%, when should this stand be harvested to maximize economic value if only the timber and the land are considered (i.e., no non-timber benefits are considered)?

Discount Rate = 2%

Stumpage Price = $2 per ft³

Residual Land Value After Harvest = $1,000 per acre

Harvest Cost = $300 per acre

Wildlife Benefit if Stand Isn't Harvested = $30 per acre per year

Stand	Per Acre
Age	Volume
41	550
42	610
43	680
44	750
45	825
46	905
47	980
48	1040
49	1095
50	1145
51	1185
52	1225
53	1260
54	1295
55	1325
56	1355
57	1380
58	1405
59	1425
60	1440