Write down a condition the forest owner may use

Reference no: EM132027169

Question: The owner of one acre of ponderosa pine (Pinus ponderosa) needs to plan a forest rotation length. Unless the owner chooses to sell the forest land, it will be kept in forestry and the chosen rotation will be maintained indefinitely. Assume that the stumpage price is p = $2.50 per cubic feet and the fixed cost of harvest is C = $4,350.90. The volume (in cubic feet) of the stand at any point in time is given by W(t) = at - bt2 = 141.2t - 0.2824t 2 , where t is measured in years. Assume that the forest owner uses an annual discount rate of r = .01 and that the present value of bare land is S = $17,912.46 per acre.

a. Write down a condition the forest owner may use to choose a rotation length that maximizes the net present value of profits from timber harvest. In a few sentences, interpret the condition.

b. What is the forest owner's efficient rotation length, rounded to the nearest year? Show your work, and plot your solution using a figure.

Reference no: EM132027169

Questions Cloud

What is the margin of error in cm : What is the margin of error in cm? (Round to one decimal place as needed.)

What do you call the hedging technique : If you have a A/P of Swedish Krona 2.5 million due in 3 months, and you would like to use euro futures contract from CME to hedge the risk.

What is the calculated chi-squared value : A sample of students responses are reproduced below. Do students prefer a particular type of bar food? Use critical value = 6.58.

What effective rate of return have you earned : You have an outstanding student loan with required payments of $600 per month for the next four years. The interest rate on the loan is 8% APR.

Write down a condition the forest owner may use : Write down a condition the forest owner may use to choose a rotation length that maximizes the net present value of profits from timber harvest.

Binge drinking and to drinking-related arrests : A researcher was interested in gender differences as related to binge drinking and to drinking-related arrests.

What return did you realize on your investment : You owned a building for one year. You bought it at $400,000 and sold it for $380,000. You earned $24,000 in rent that year.

Calculate the number of possible values of x : Given that X has a discrete uniform distribution that can have value from -2 to +2, how would I calculate the number of possible values of X, n?

What is the project net present value : Owls Company is considering opening a new production facility in Philadelphia, Pennsylvania. In deciding whether to proceed with the project.

User Account

All Pages