'Chapter 9\r'

'Chapter 9 closing shift Ashford University BUS 650 Managerial Finance When should Bunyan Lumber, harvest the set? The hard currency watercourse will reverse at the inflation regularise of 3. 7%. Utilizing the real bullion flow formula (1+R) =v (1+R)(1+H) 1. 10 = (1+R)(1. 037) R= 6. 08% The saving shops ar anticipated to grow slower than the inflation treasure. The return for the saving strain will be, (1+R) = (1+R) (1+H) 1. 10 = (1+R) (1. 032) R= 6. 5% The capital flow from the cutting process is as follow, coin flow from press cutting = Acres thinned x cash flow per acre Cash flow from thin = 7,500 ($1,200) Cash flow from thinning = $9,000,000\r\n newspaper clipping beyond the initial thinning is conducted on a inscription and can be included. After valuate speak to of the saving storehouse will be, After impose conservation fund apostrophize = (1”C. 35) ($250,000) After tax conservation fund cost = $162,500 For each depth psychology the cost and re venue are; revenue enhancement [ E (% of grade )(harvest per acre)( determine of board game)](acres harvested) (1”C defect rove) Tractor cost = (Cost MBF)(MBF per acre)(acres) way cost = (Cost MBF)(MBF per acre)(acres) Sale supply and nerve = (Cost MBF) (MBF acre) (acres) It is assumed that there is no depreciation as a result of the harvest.\r\nThis is an indicator that operating cash flow is equal to net income. The NPV of the thinning, the NPV of all early harvests, minus the present value of the conservation fund costs. Revenue $39,800,250 Tractor cost 7,200,000 Road 2,700,000 Sale prep & adenylic acid; admin 945,000 Excavator atomic reactor 1,200,000 Broadcast suntan 2,287,500 target preparation 1162,500 lay costs 1,800,000 EBIT $22,505,250 Taxes 7,876,838 sack up income (OCF) $ 4,628,413 offshoot harvest later 20 historic period PV First = $14,628,413/ (1+ . 0608)20 PV First = $4,496,956 Projection of thinning after 40 historic period 40- course plan please aim = [(1+ . 0608)40] ? C1 0- course jut amour rate = 958. 17% 40-year conservation rice beer rate = [(1+ . 0659)40] ? C1 40-year conservation interest rate =1,183. 87% Present value of approaching thinning on this memorial, which will be; PV growth = [($ 14,628,413/9. 5817)] / (1+ . 0608)20 PV return = $469,325. 52 Present value of conservation notes deposit PV preservation = ? C$162,500 ? C$162,500/11. 8387 PV saving = ? C$176. 226. 22 Current value of conservation PV preservation = ? C$176,226. 22/ (1+ . 0659)20 PV Conservation = ? C$49,182. 52 NPV of a 40-year harvest document is: NPV = $4,496,956 + 939,286. 45 + 469,325. 52 ? C9,182. 52 NPV = $5,856,385. 9 45-year harvest schedule: Revenue $55,462,853 Tractor cost $9,840,000 Road $3,690,000 Sale preparation & admin $1,291,500 Excavator piling $1,200,000 Broadcast combustion $2,287,500 Site preparation $1,162,500 Planting costs $1,800,000 EBIT $34,191,353 Taxes $11,966,973 simoleons income (OCF) $22,224, 379 The PV of the source harvest in 25 years is: PV first = $22,224,379/ (1+ . 0608) 25PVFirst = $5, 087, 23 45 year interest rate 45-year project interest rate = [(1+ . 0608)45] ? C1 45-year project interest rate =1,321. 11% 45 year interest rate for the conservation fund 45-year conservation interest rate = [(1+ . 0659)45] ? C1 5-year conservation interest rate = 1,666. 38% PV of future thinning PV clipping = $9,000,000/13. 111 PV cutting = $681,246. 84 Utilizing the OCF of $22,024,504, the PV are as follow, PV result = [($22,224,379/13. 21111)] / (1+ . 0608)25 PV Harvest = $385,073. 30 The present value of these deposits is: PV Conservation = ? C$162,500 ? C $162,500/16. 6638 PV Conservation = ? C$174,800. 29 NPV of a 45-year harvest schedule is: NPV = $5,087,231+ 681. 246. 84 + 385,073. 30 ? C 35, 458, 26 NPV = $6, 1118,092. 40 50-year harvest schedule: Revenue $64,610,783 Tractor cost $11,280,000 Road $4,230,000 Sale preparation & admin $1,480,500\r\nExcavator piling $1, 200,000 Broadcast burning $2,287,500 Site preparation $1,162,500 Planting costs $1,800,000 EBIT $41,170,283 Taxes $14,409,599 Net income (OCF) $26,760,684 The PV of the first harvest in 30 years is: PV First = $26,760,684/ (1+ . 0608)30 First = $4,561,202 The effective 50-year interest rate for the project is: 50-year project interest rate = [(1+ . 0608)50] ? C1 50 year project interest rate=1,808. 52% 50 year interest rate for the conservation silver 50-year conservation interest rate = [(1+ . 0659)50] ? C1 50-year conservation interest rate = 2,330. 24% Present value of future thinning on this schedule, which will be\r\nPV Thinning = $9,000,000/18. 0852 PV Thinning = $497,644. 82 The operating cash flow from each harvest on the 50-year schedule is $26,531,559, so the present value of the cash flows from the harvest are: PV Harvest = [($26,760,684/18. 0852] / (1+ . 0608)30 PV Harvest = $497,644. 82 Present value of the conservation fund deposits PV Conservation = ? C$162,500 ? C $ 162,500/23. 3024 PVConservation? C$171,485. 25 Today’s conservation value PV Conservation = ? C$171,485. 25/ (1+ . 0659)30 PV Conservation = ? C$25,283. 50 NPV of a 50-year harvest schedule is: NPV = $4,561,202 + 497,644. 82 + 252,206. 52 ? C 25,283. 0 NPV = $5,285,770. 21 55-year harvest schedule: Revenue $72,972,113 Tractor cost $12,600,000 Road $4,725,000 Sale preparation & admin $1,653,750 Excavator piling $1,200,000 Broadcast burning $2,287,500 Site preparation $1,162,500 Planting costs$1,800,000 EBIT $47,543,363 Taxes $16,640,177 Net income (OCF) $30,903,186 First harvest in 35 years PV First =$30,903,186/ (1+ . 0608)35 PV First = $3,922,074 Thinning 55 years from today: 55-year project interest rate = [(1+ . 0608)55] ? C1 55-year project interest rate = 2,463. 10 55 year conservation fund 55-year conservation interest rate = [(1+ . 0659)55] ? C1 5-year conservation interest rate = 3,243. 60% Present value of future thinning: PV Thinning = $9,000,000/24. 6310 PV Thi nning = $365,392. 74 Present value of the cash flows from the harvest are: PV Harvest = [($30,903,186/24. 6310] / (1+ . 0608)35 PV Harvest = $159,233. 03 Present value of the conservation fund deposits: PV Conservation = ? C$162,500 ? C $162,500/32. 4360 PV Conservation = ? C$169,097. 37 Today’s value of the conservation fund PV Conservation = ? C$169,097. 37/(1+ . 0659)35 PV Conservation = ? C$18,121. 00 NPV of a 55-year harvest schedule NPV = $3,922,074 + 365,392. 74 +159,233. 03 ? C18, 121. 00 NPV = $4,428,578. 40\r\n'