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Chapter 7
Bunyan Lumber, LLC
Input area:
Total acreage 5,000
Years since original planting 20
1P pond value 645$
Years from today for harvest Harvest (MBF)
to begin per acre 1P 2P 3P
20 15.1 14% 32% 54%
25 17.4 20% 44% 36%
Defect rate 5%
Tractor cost (MBF) 145$
Road (MBF) 50$
Sale preparation and
and administrative (MBF) 18$
Output area:
Real required return 6.08%
Excavator piling 775,000
Broadcast burning 1,525,000
Site preparation 750,000
The effective real interest rate for this period is 958.17%
The real rate in the conservation fund is 6.59%
The effective real interest rate for the
Road 4,350,000
Sale preparation & admin 1,566,000
Excavator piling 775,000
Broadcast burning 1,525,000
Site preparation 750,000
PV of future thinnings 454,164.56$
PV of future harvests 389,820.51$
Harvest in 30 years
Revenue 53,659,515$
Tractor cost 13,195,000
Road 4,550,000
Sale preparation & admin 1,638,000
Value of conservation at harvest (411,951.03)$
PV of future thinnings 331,763.21$
Revenue 55,808,629$
Tractor cost 13,702,500
Road 4,725,000
Sale preparation & admin 1,701,000
Excavator piling 775,000
Next thinning will occur in 55 years, and will reoccur at this same interval.
The effective real interest rate for this period is 2463.10%
The effective real interest rate for the
