The merchantable volume of timber on a hectare of forest increases with stand age according to the yield table below. Assume timber has a pulp log value of $5/m3 up until age 25 and then a saw log value of $10/m3 from age 30 and onward. Assume an interest rate is 6%. There are no other forest management costs or benefits.

table below is the table stand age years on the left side and timber volume on the right side Stand age (years) Timber volume (m3/ha) 15 0 20 50 25 100 30 240 35 400 40 530 45 640 50 730 55 760 a. A tax of 2.5% is levied on the value of standing timber every five years until the stand reaches fifty years. Calculate the present value of tax payments and interest accumulated over the fifty years. [Hint: Recognize that the real cost of the tax grows in any given period by any new taxes paid plus the present value of past taxes.] b. What is the net present value of the stand with and without the tax? c. Now assume the tax is levied annually at a rate of 1.0%. Calculate the present value of tax payments and interest accumulated over the fifty years. To simplify calculations hold timber volume constant between 5-year periods. d. Explain generally how this sort of tax affects forest management and investment decisions.