Chapter 9 Questions and Answers
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9.1 Four independent forestry investment projects are being considered for implementation using this year's capital budget.
1. (50 acres) Precommercial thin overstocked pine stands at a cost of $85 per acre and net an increased yield value of $1100 when the stands are regeneration harvested in 30 years.
2. (100 acres) Precommercial thin fir stands at a cost of $70 per acre and net an increased yield of $1000 per acre when the stands are regeneration harvested in 20 years.
3. (100 acres) Underplant understocked pole stands at a cost of $150 per acre and net an increased yield of $5000 in 40 years.
4. (200 acres) Release premium hardwood crop trees by selective girdling and then fertilize at a cost of $60 per acre to net a harvest value increase of $400 per acre in 10 years.
Assume a guiding rate of 10 percent and a planning horizon of 40 years.
(a) Calculate the per acre internal rate of return (IRR) for each project.
(b) Calculate the per acre net present value of each project after normalizing the projects for length.
(c) How many dollars could be used for projects whose IRR is greater than or equal to the guiding rate?
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9.2 Given the economy depicted in table 9.10,
(a) What are the technical coefficients aij that describe the input proportions for the agricultural sector?
Considering the proportion of total sales in exports and the multiplier effect of increased export sales, rank the importance of the four producing sectors [(1) to (4)] in terms of the impact of a $100 increase in total sales from that sector
Trace the distribution of economic impacts from a $100 increase in exports from the agricultural sector.
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9.3 Discussion questions. For each of the following problem situations, identify whether it is likely to be a type A or a type B process to generate alternative solutions, and which of the three economic efficiency problem situations is addressed. (several could go either way depending on what you assume.)
1. The range specialist for a private ranch is trying to increase forage production by 100 animal unit months (AUM) on a grazing allotment.
2. The recreation staff of a state park system is deciding which campgrounds to renovate with this year's budget of $30,000.
3. The timber staff of an industrial corporation is asked to estimate the justifiable increase in budget for intensified management above current levels for the major site / species groups of its 3-million acre land holdings.
4. The regional timber office wants the local forester to provide an economically justifiable schedule of timber sales from a forest, which will meet next year's timber production targets.
5. The national forest planning team is deciding which overall forest management plan to recommend, considering long-term harvest schedules and management intensity for the 1.2-million acre forest.
6. A silviculturalist is recommending a prescription for a particular timber sale and stand on a 100-acre nonindustrial private forest ownership.
7. A timber company wants to locate and build an efficient tree seedling nursery for a region.
8. A fish hatchery manager is using a linear program to select an efficient feed mix.
9. A private logging engineer is trying to decide whether a cable, high-lead, or helicopter logging system is the most efficient for a particular timber sale.
10. A farmer is trying to decide whether or not to plant some of her fields in pine next year.
11. A public recreation specialist is working with the timber specialist to determine an efficient balance of timber production and visual values for different planning units.
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9.4 We discussed stability and resilience of rural timber-dependent communities. How would you respond to an urban worker who asks why foresters and decision makers worry so much about rural unemployment and displacement of loggers and their families (enough to spend $1.2 billion in the Northwest Economic Adjustment Initiative)? This disgruntled worker contrasts the concern for loggers with the indifference faced by urban workers who lose their jobs and are forced to move to places where there are jobs.
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