Chapter 13: FINANCIAL MODELING CASE STUDY IN FORESTRY PROJECT EVALUATION.
Description of a generic computer model for the evaluation of various forestry investments.
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Forestry Investment Computer Models The roles of modelling in forestry investment. To evaluate the NPV and LEV of particular
plantations.
To allow sensitivity and risk analyses of forecast variables. To facilitate analysis of various
cropping scenarios:
eg; harvest lives, planting regimes,
species mixtures.
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Forestry Models
Modelling is useful because:
1. There are many data types.
2. The computational interrelationships between
data types are complex: eg rainfall/soil type/location/species.
3. Plantation life spans are very long.
4. Many scenarios are possible.
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Forestry Models: Specific Vs Generic
A Specific model can evaluate individual
forestry projects.
A Generic model can evaluate a variety of
separate investment projects for a variety of users.
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Forestry Models: Specific Vs Generic Choice Specific – Shorter development time easier to develop less data required limited to one user/one application a once off application means that there are
no economies of scale.
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Forestry Models: Specific Vs Generic Choice
Generic – multiple applicability means economies of
scale
wide range of users and applications can be commercially marketed long development time extensive data required data relationships more complex.
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Forestry Investment Computer Models There are two types:
1. For evaluating forestry
investments as independent projects
1. For evaluating forestry
projects within the overall operations of a business firm.
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Forestry Investment Computer Models Model Design Considerations I:
Who are the ultimate
users?
What software should be used to build the model ?
What hardware
platform should be employed?
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Forestry Investment Computer Models Model Design Considerations II:
What type of user interface
is best
How is the model going
to be tested?
Who is responsible for
maintenance and updates?
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Forestry Investment Computer Models Ch 13 reviews a generic computer model: the ACTFM Australian Cabinet Timbers Financial Model. This model: Suits investors, consultants, landholders, and
government agencies
Covers over 30 native species Uses linked sheets in an Excel workbook Is menu driven.
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ACTFM Behind the Scenes The Excel sheets behind the menus hold: 1.
Information about the program; data relating to MAI’s, stumpage prices, and harvest ages of over 30 different cabinet timber species 2. Data relating to plantation establishment and
3.
maintenance costs Input tables for the entry of alternative MAIs, prices and costs, and harvest age data
4. Pages containing visual basic code.
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ACTFM Behind the Scenes A picture of the logical layout.
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ACTFM The User Interface An output screen showing results calculated from input selections.
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ACTFM The User Interface Selected dialog screens
An annual cost sheet
A prescriptive cost sheet
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ACTFM The User Interface A dialog screen.
“Costs during plantation” sheet
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ACTFM A Generic Computer Model
This model was difficult to develop as it required extensive data collection, complex computational formulation, and extensive interface planning, but it is very successful, and has wide application.
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