Homework: Problem #3 Your employer is trying to decide if they should go forward on their plans for a Douglas-fir plantation in the US Northwest. You know the following information: It will cost $220 per acre to plant and prepare the land. It will cost an average of $10 per acre every year to manage the property. The property will receive $7 per acre every year for hunting licenses and water rights. You have predicted the following tree growth per acre: Yield (cu. Ft.) Age 30 40 50 60 70 80 90 # of trees 130 240 258 244 230 203 181 1140 3718 6093 8212 10080 11665 13011 You also predict that Douglas-fir stumpage prices will be at around $0.75 per cubic foot and stay steady throughout the time period. You know that you could invest your money for 4% outside of the forestry business. If your employer is only concerned about the amount of money that could be made with timber, at what age would you recommend cutting the plantation? Hint: Make a table as above but include LEV as a column. Use Excel to solve this problem. Write a memo to your employer explaining your decisions. A memo should be brief (1-2 paragraphs) but well-written. Explain a little about what you know and what you expect to happen. Offer your decision and the reasoning behind your decision. The memo should be written in a formal manner (no slang, etc). Writing a good memo is a skill you will need to learn in order to do well in government management. Use the following basic template for your memo: