Assignment #2
(Bunyan Lumber, LLC Project)
BUS: 650
Instructor Watson
Renee Frempong
January 9, 2012

I strongly believe that with the calculations that I have made, Bunyan Lumber should harvest their forest in 25 years and continue to harvest every 45 years. They gain the most profit and increase revenue from harvesting in the 25 years since the forest will be 45 years mature.
Here are the figures:
Total Number of acres 7500
Inflation rate 3.7%
Nominal required return 10%
Current logging cost per MBF $160.00
Road construction cost per MBF $60.00
Sales and administrative costs per MBF $21.00
Excavator piling per acre $160.00
Broadcast burning per acre $305.00
Site preparation per acre $155.00
Planting costs per acre $240.00
Conservation contribution today $250,000.00
Conservation contribution growth rate 3.2%

The total MBF (thousands of dollars per board feet) is established by multiplying the amount per acre by the total acres at the same time as factoring in the 5% loss of timber due to defects and breakage. According to the textbook, managers use the scenario analysis which is a variant of sensitivity, to minimize this problem. Simply put, this approach examines a number of different likely scenarios, where each scenario involves a confluence of factors (Ross, et, al. 2011). Moreover, scenario allows you to incorporate many different variables at a time while the sensitivity analysis can only incorporate one variable cost at a time. After calculating the amount of MBF per percentage, you find the total price of each by multiplying it by the price per MBF making sure to factor in the yearly inflation rate. The revenue at the time of logging is explained by working out the total MBF by the total price. To calculate the revenue at the same time as the planting costs would need to have time that can be