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Project 1-solutions - Total acres Computation of cashflows...

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Total acres 7500 Computation of cashflows from thinning Inflow from thinning today at year 20 9000000 Less Taxes @ 35% 3150000 Post tax cash flow from thinning 5850000 YEARS FROM TODAY TO BEGIN HARVEST HARVEST (MBF) PER ACRE TIMBER GRADE 1P 2P 3P 20 6 10% 40% 50% 25 8.2 13% 46% 41% 30 9.4 17% 48% 35% 35 10.5 19% 51% 30% Computation of price (inflation adjusted) Inflation rate 3.70% TIMBER GRADE PRICE PER MBF Years 20 25 30 35 1P $1,150.00 $1,379.09 $1,653.81 $1,983.26 2P $990.00 $1,187.21 $1,423.71 $1,707.33 3P $840.00 $1,007.33 $1,208.00 $1,448.64 Cash flow from the project Years 20 25 30 35 Harvest (MBF) per acre 6 8.2 9.4 10.5 Total MBF 45000 61500 70500 78750 Revenue from 1P $5,175,000 $11,025,799 $19,820,903 $29,674,496 Revenue from 2P $17,820,000 $33,586,282 $48,178,482 $68,570,494 Revenue from 3P $18,900,000 $25,399,902 $29,807,394 $34,224,133 Total revenue $41,895,000 $70,011,983 $97,806,780 $132,469,123 Less: 5% loss $2,094,750 $3,500,599 $4,890,339 $6,623,456 Net revenue $39,800,250 $66,511,384 $92,916,441 $125,845,666 Less: Expenses Cost of logging 7200000 11800187 16221711 21729608 Construction of road system 2700000 4425070 6083142 8148603 Selling, adm overhead 945000 1133250 1359000 1629721 Excavator piling 1200000 1439047 1725714 2069486 Broadcast burning 2287500 2743184 3289642 3944959 Site preparation 1162500 1394077 1671785 2004815 Planting costs 1800000 2158571 2588571 3104230 Total expenses 17295000 25093385 32939565 42631421 Revenue - Expenses (Pre tax profit) $22,505,250 $41,417,999 $59,976,876 $83,214,245
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