3347 Words14 Pages

http://www.papercamp.com/essay/11828/Tree-Values-Case
Section 1 – Executive Summary
This report analyzes the case “Tree Values” to find an optimal way for Mr. Smith to manage his forestland and harvest the crop trees. The fundamental idea in this report is based on the concept of present value. A number of options are analyzed and the one with highest present value of pay off is considered.
Questions 9, 10, and 11 give Mr. Smith 3 options: * Option 1: Harvest all crop trees now and receive $8,160 * Option 2: Let the forest grow without thinning, then harvest all crop trees 60 years from now and receive $537,962.01 at harvesting, equivalent to $28,800.08 now * Option 3: Thin and manage the forest, then harvest all crop trees 50*…show more content…*

|Years |DBH(inches) |TreeGrade |BoardFeet/Tree |$MBF |Price/Tree($)| |Present | |from now | | | | | |Value ($) | |0 |10 |4 |20 |40.00 |0.80 |0.80 | |10 |11 |4 |40 |40.00 |1.60 |0.98 | |20 |12 |4 |60 |40.00 |2.40 |0.90 | |30 |13 |4 |85 |40.00 |3.40 |0.79 | |40 |14 |4 |110 |40.00 |4.40 |0.63 | |50 |15 |4 |145 |40.00 |5.80 |0.51 | |60 |16 |4 |180 |40.00 |7.20 |0.39 | Question 3 The price of a tree at increments of 10 years between now and 60 years from now will be calculated using the same formula as in question 2. However, because the stumpage price ($MBF)

|Years |DBH(inches) |TreeGrade |BoardFeet/Tree |$MBF |Price/Tree($)| |Present | |from now | | | | | |Value ($) | |0 |10 |4 |20 |40.00 |0.80 |0.80 | |10 |11 |4 |40 |40.00 |1.60 |0.98 | |20 |12 |4 |60 |40.00 |2.40 |0.90 | |30 |13 |4 |85 |40.00 |3.40 |0.79 | |40 |14 |4 |110 |40.00 |4.40 |0.63 | |50 |15 |4 |145 |40.00 |5.80 |0.51 | |60 |16 |4 |180 |40.00 |7.20 |0.39 | Question 3 The price of a tree at increments of 10 years between now and 60 years from now will be calculated using the same formula as in question 2. However, because the stumpage price ($MBF)

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