Q1 You have the responsibility to manage a 7,000,000 hectare forest of uniform productivity. Three-quarters of the forest is old growth timber with an average volume of 800 cubic meters per hectare, the other quarter is immature timber having a mean annual increment of 10 cubic meters per hectare over a planned rotation of 50 years.

a) Use the Hanzlik formula to calculate the allowable annual cut this forest

b) How does your answer compare with the allowable cut after the old growth is depleted? Explain the implications.

c) Calculate the net present value of the forest assuming it will be harvested in equal annual amounts over the next 50 years. Assume the discount rate is 2 percent and the value of timber is $15 per cubic meter.

d) How does this compare with the value of the timber if it were all harvested immediately?