# Bunyan Lumber

According to my calculations, Bunyan Lumber should harvest their forest in 25 years and should do so every 45 years.   They gain the most profit from harvesting in 25 years when the forest will be 45 years mature.   The specs for this project are as follows:
Number of acres 7500
Inflation rate 3.7%
Nominal required return 10%
Current logging cost per MBF \$160.00
Road construction cost per MBF \$60.00
Sales and administrative costs per MBF \$21.00
Excavator piling per acre \$160.00
Site preparation per acre \$155.00
Planting costs per acre \$240.00
Conservation contribution today \$250,000.00
Conservation contribution growth rate 3.2%

The total MBF for each scenario is found by multiplying the amount per acre by the total acres while factoring in the 5% loss of timber due to defects and breakage.   After calculating the amount of MBF per percentage, you find the total price of each by multiplying it by the price per MBF making sure to factor in the yearly inflation rate.   The revenue at the time of logging is figured by computing the total MBF by the total price.   In order to obtain the revenue at the time of planting includes factoring in the time since planting, as well as the 10% discount rate.   Total revenues for all four scenarios are as follows:
Harvest time MBF / acre Total MBF 1P % 2P % 3P % 1P 2P 3P
40 6 42750 10% 40% 50% 4275 17100 21375
45 8.2 58425 13% 46% 41% 7595 26876 23954
50 9.4 66975 17% 48% 35% 11386 32148 23441
55 10.5 74812.5 19% 51% 30% 14214 38154 22444

Continued:
1P Price 2P Price 3P Price Total Revenue @ Logging Total Revenue @ Planting
\$2,378 \$2,047 \$1,737 \$82,311,578 \$1,818,668
\$2,852 \$2,455 \$2,083 \$137,553,331 \$1,887,123
\$3,420 \$2,944 \$2,498 \$192,162,081 \$1,636,943
\$4,102 \$3,531 \$2,996 \$260,263,576 \$1,376,625
The variable costs per MBF are calculated by multiplying the cost per MBF by the amount of MBF while also factoring in the...