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Forecaster v2.0
The Economic Analysis Process
The Analysis Process
To enable an economic analysis(8), the EconomicAnalysis table should be checked on the
Report Tables tab of the simulation's Report Options, and an Economics Settings entity must
be selected in the Project form.
The analysis will calculate the following summarising values for each scenario, and they will
appear in both the Economic Analysis table and the Economic Analysis report:
Net Present Value
For each combination of variations analysed, a Net Present Value (NPV) is calculated as the
sum of all discounted costs and discounted revenues.
Internal Rate of Return
The analysis includes the calculation of an Internal Rate of Return (IRR) value. The IRR is the
value of the discount rate for which the NPV equals zero.
Note that since there is a distinct discount rate for carbon data, an IRR value can be
meaningfully calculated only either when there is no carbon data present, or when the carbon
discount rate is equal to the base discount rate being used (taking into account any variation
on the base discount rate). In all other cases, there will be no value of IRR produced, and a
warning message will be published.
Note too, that in the case where the sum of all undiscounted costs exceeds the sum of all
undiscounted revenues, no value of IRR can be calculated (since no matter what discount rate
is selected, the total discounted revenues can never match the total discounted costs). When
this occurs, a warning message will be published, and the analysis will continue with no value
for IRR for that scenario.
Land Expectation Value
This is effectively the NPV of a regime in perpetuity, i.e. assuming replanting the same regime
over and over again, with the same costs, revenues, etc.
LEV = NPV1 × ((1 + i) ^ t / (((1+i) ^ t) - 1) where:
NPV1 = the single rotation NPV
i = the discount rate
t = the interval between rotations - the (economic) rotation length plus the regeneration
lag
Stumpage
The stumpage is calculated as the sum of all log product revenues at clearfell ($/ha).
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© 2014 New Zealand Forest Research Institute Limited