Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Optimal Harvesting Age
Let there be a per unit regeneration cost C. The timber growth is measured by volume V(T) which is a function of the age of the timber T. Attaching a price P, the maximum present value of the stand represented by λ is,
Equation 1
The first order condition gives us
Equation 2
PV' (T) = iPV (T) + i λ
Where V’ is the first order derivative of V.
The results indicate that, the Faustmann harvest age TF, is the one at which the marginal increase in value from delaying the harvest equals opportunity cost of delaying the harvest. The opportunity cost includes the potential interest income foregone on the delayed receipt of current harvest revenues plus the interest cost of delaying receipts from future harvest cycles. The second component reflects an implicit rental cost of land. The optimum T is popularly known as 'Faustmann Rotation Age'. Let us denote it by TF.
The first order condition equation 2 can be rewritten to give us the Faustmann condition
Equation 3
Equation 3 can be interpreted as, 'hold timber stocks uncut until the rate of growth in the combined asset value of timber and land just equals market rate of interest'.
QUESTION a) How would the strategy of a firm faced with repeated games differ from that faced with sequential games? b) What do you understand by an optimal level of poll
(1) The federal government is considering selling tracts of federally owned land to private developers and using the revenues to provide aid to victims of an earthquake in a foreig
Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4
Consider a case, if an insurance company merges with a bank. We know that insurance company bears risk for insurers. Suppose, after merger, bank gets in some trouble for reasons ot
#questioi hour classn..
The news release is the ‘granddaddy' of public relations writing vehicles. (a) As a PR student, show the main points you would consider when attempting to write an effective ne
Q. Why does government undertake an economic activity? If ever an activity has large externality or spill over and includes a large number of people, it may be found better th
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd