ou have been asked by the North Coast Forestry (NCF) to determine the optimal rotation age for a single harvest Blackbutt plantation in northern NSW. The company is unsure of the discount rate to use and have suggested you use 2%, 4% and 6% for comparison. (This is done using thespreadsheet provided- see the steps below. Note that you donotsubmit the spreadsheet as part of your answer. Record the answers in a word (or other document) and submit).

a. Using the NPV method, determine the optimal rotation age for the plantation for the various discount rates (This is done using the spreadsheet provided, see the steps below). Explain the changes in the optimal rotation

b. NCF are unsure about the establishment cost and as a result they want you to vary the establishment cost from $1,500 to $2,500 and determine the NPV at the optimal rotation age for a 4% discount rate. Does the optimal rotation age change from part a? Explain

c. NCF are also unsure about future timber prices and ask you to vary the stumpage price from $70 to $50, and determine the NPV at the optimal rotation age for a 4% discount rate. Does the optimal rotation age change from part a? What do you exptect would happen if price was a function of the age of the stand?

The following articles fromThe GuardianandThe Conversationdiscuss the rate of deforestation and land clearing in Australia and looks at the negative impacts on wildlife population and other negative externalities.

d. Is land clearing in these instances an efficient use of resources? Use the following articles (and/or other sources) to justify your response.

Region: North Coast NSW Species: E. pilularis Stumpage Price ($/m3) 70 Land Cost ($/ha) 1900 Harvest cost ($/m3) 13 Planting cost 1500 Interest rate % 0.02Stand Information Age Total Volume MAI Revenue NPY (years) (m3/ha) (m3/ha.yr) ($/ha) ($/ha) 10 40 4.0 11 45 4.1 12 54 4.6 13 66 5.1 14 84 6.0 15 105 7.0 16 128 8.0 17 153 9.0 18 180 10.0 19 209 11.0 20 235 11.8 21 263 12.6 22 290 13.2 23 315 13.7 24 340 14.2 25 365 14.6 26 392 15.1 27 414 15.3 28 437 15.6 2! 461 15.9 30 484 16.1 31 503 16.2 32 525 16.4 3.3 546 16.6 34 569 16.7 35 588 16.8 36 607 16.9 37 626 16.9 38 645 17.0 39 664 17.0 40 680 17.0 41 698 17.0 42 710 16.9 43 727 16.9 44 736 16.7 45 747 16.6 46 754 16.4 47 766 16.3 48 778 16.2 49 784 16.0 50 794 15.9