Topic 2.1

• an important consideration in timber production?

  time
• time is a variable input in the timber production
• Decision of when to harvest depends on

  • Biological maturity of timber species

  • Objectives of management
• Mean Annual Increment = Total Yield / Age or time
• Current Annual Increment = change in Total Yield / change in Age or time
• when the total yield decreases, the current annual increment is lower than the mean annual increment
• when the total yield increases, the current annual increment is higher than the mean annual increment
• current annual increment is an equivalent of marginal product
• mean annual increment is an equivalent of average product
• Rotation – the complete life cycle of a crop from establishment until final harvest
• Cutting cycle

  – the number of years between two major harvests in the same working unit and/or region (PD 705) or the number of years it takes before an uneven-aged forest can be logged again
• in the Philippines the cutting cycle is 35 years in accordance to EO 23
• cutting cycle was based on climatic type of area
• Type 1: climate with two pronounced seasons and a dry season between November and April: cutting cycle 45 years;
• Type 2: climate without a dry season and with a very pronouced maximum rainfall between November and January: cutting cycle 35 years:
• Type 3: climate without very pronounced season but relatively dry between November and April: cutting cycle 40 years;
• Type 4: climate with rainfall more or less evenly distributed throughout the year: cutting cycle 30 years.
• Considers the effect of time on investment decisions?

  time value of money
• Value of money changes through time? t/f

  true
• Value of money changes through time because of?


  consumption, investment, risk and uncertainty
• • Consumption – normal preference for present over future
• Investment – available money today maybe invested for a period of time to earn interest or generate income
• • Risk and uncertainty – as time is prolonged, higher chance that something will go wrong => increasing chances of losing
• Processes used to include the time dimension of money?

  discounting and compounding
• Discounting – process by which a future value is brought to its present value
• • Compounding – process by which a present value is converted to its future value
• formula for?

  Discounting

  
• formula for?

  Compounding

  
• two kinds of interest?

  simple interest and compounding interest
• Simple Interest – only the principal earns interest for the entire life of the transaction
• Compound interest – the interest earned in the previous period is added to the principal of the next period
• formula for?

  compound interest

  
• formula for?

  simple interest

  
• 17623.42

  
• 5674.27

  
• 250

  
• 8597.91

  
• formula for?


  future-terminable-periodic payment

  
• solve for this?


  54456.61

  
• formula for?


  future-terminable-annual payment