1 / 5

Soil Expectation Value (SEV)

Soil Expectation Value (SEV). Financial criteria used to make even-aged timber management decisions. Simply the year zero value of a perpetual series of even-aged rotations Also known as Faustman formula. Net Present Value (NPV) for a Single Rotation.

selma
Download Presentation

Soil Expectation Value (SEV)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Soil Expectation Value (SEV) • Financial criteria used to make even-aged timber management decisions. • Simply the year zero value of a perpetual series of even-aged rotations • Also known as Faustman formula

  2. Net Present Value (NPV) for a Single Rotation • NPV may include the initial cost of land and land value at time r where, Nt = net cash flow in year t (Rt - Ct) Rt = revenue in year t Ct = expenditure year t n = r = rotation length i = discount rate

  3. SEV timeline PV1 1st rotation PV2 2nd rotation PV3 3rd rotation PVn nth rotation PV0 of perpetual series PV1 = PV2 = PV3=………PVn

  4. Soil Expectation Value (SEV) r ∑ [ (Rt-Ct) (1+i)r-t ] t = 0 SEV = (1+i)r - 1 where, r = rotation length in years, i = discount rate t = index on year” 0, 1, 2, . . . r Rt = revenues in tth year Ct = expenditures in tth year

  5. Example

More Related