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Chapter 7Bunyan Lumber, LLCInput area:Total acreage5,000Years since original

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Chapter 7Bunyan Lumber, LLCInput area:Total acreage5,000Years since original planting201P pond value$6202P pond value$6053P pond value$595Cash flow/acre from thinning$1,000Years from today for harvestHarvest (MBF)to beginper acre1P2014.116%2516.420%3017.322%3518.124%Defect rate5%Tractor cost (MBF)$140Road (MBF)$50Sale preparation andand administrative (MBF)$18Excavator piling/acre$150Broadcast burning/acre$300Site preparation/acre$145Planting costs/acre$225Nominal required return10.00%Inflation rate3.70%Tax rate35%Conservation fund$250,000Conservation fund growth3.20%Output area:Real required return6.08%Cash flow from thinning$5,000,000Harvest in20yearsRevenue$40,359,135
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Tractor cost9,870,000Road3,525,000Sale preparation & admin1,269,000Excavator piling750,000Broadcast burning1,500,000Site preparation725,000Planting costs1,125,000EBIT$21,595,135Taxes7,558,297Net income (OCF)$14,036,838PV of first harvest$4,315,098Next thinning will occur in40years, and will reocThe effective real interest rate for this period is958.17%The real rate in the conservation fund is6.59%The effective real interest rate for theconservation fund for this period is1183.87%Aftertax cost of convservation$(162,500.00)Value of conservation at harvest$(176,226.22)PV of future thinnings$521,825.80PV of future harvests$450,345.94PV of conservation fund$(49,182.52)Total NPV$5,238,087.63Harvest in25yearsRevenueTractor costRoadSale preparation & adminExcavator pilingBroadcast burningSite preparationPlanting costsEBITTaxesNet income (OCF)PV of first harvestNext thinning will occur in45years, and will reocThe effective real interest rate for this period is
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