The United States Forest Service is considering a management plan (recreation and timber) for a particular forested area. Recreation would involve picnicking at a scenic overlook. Timber harvests would be restricted to an isolated area far removed from the recreation site; consequently, the two uses do not conflict (the timber harvests do not reduce the value of picnicking). Consider the following data: - Constructing a basic road into the forest leading to both the timber harvest site and the recreation site would cost $10,000 in year 0. - Strengthening an existing bridge to support logging trucks would cost $2000 in year 0. - A road spur (an addition to the basic road) to the scenic overlook and picnic area would cost $12,000 in year 0; - The net present value of all timber benefits from harvesting operations is $11,000 (these net benefits account for all timber revenues and harvesting costs) - The annual benefit of recreation is calculated to be $2000; this benefit is expected to start in year 1 and continue forever; - The discount rate is 10%. The data above is a complete list of all benefits and costs. Given this data, determine the net present value of each project. Which of the following options do you recommend? Show your work.

1. Option 1: Use the area for timber only.
2. Option 2: Use the area for recreation only (remember benefits for recreation start in year 1)
3. Option 3: Use the area for both recreation and timber(remember benefits for recreation start in year 1
4. Option 4: Do nothing.
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