To maximise the profit from the crop of trees both the initial expenditure and the long-term profit must be considered.
The Lodgepole Ping is the most expensive and the European Larch the cheapest of the trees. Then this is offset against the profit gained from the thinnings at both 10 and 20 years:
Sitka Spruce: -120000+10000+40000= -70000
European Larch: -158000+15000+40000= -60000
Lodgepole Pine: -130000+20000+30000= -80000
So over the first 20 years the European Larch loses the least money. However, to discover the best tree to plant for a long term profit over 70 years this loss must be taken from the profit gained when the trees are felled:
SS: 1126800-70000= 1056800
EL: 1158000-60000= 1098000
LP: 1144000-80000= 1064000
So after 70 years the European Larch makes the most profit. However after 70 years two of the trees begin to be worth less so if the trees are to be felled at 90 years the profit must be recalculated.
SS: 805000-70000=735000
EL: 837000-60000=777000
LP: 1476000-80000=1396000
So after 90 years the Lodgepole Pine is the best value, surpassing the profit gained by the European Larch after 70 years, though not by a great deal.
So perhaps for a more long term plan it would be better to plant a mixture of both Lodgepole Pine and European Larch, to reduce the initial loss and to take some revenue from the Larch after 70 years, and then replant these fields with some of the profits, then taking a larger profit at 90 years. This would give a cycle so that some money would be collected after a shorter period of time to sustain the plantation, as the extra £298000 gained with the Lodgepole Pine must be compared with the twenty years extra for this gain.
***
I observed that in the table the possible income per hectare after a number of years was written. I created a table with the profit for each type of tree, taking into account the planting cost per hectare, the profit from the thinning after 10 and 20 years (per hectare too), and the possible income after the period of time written above.
|
After Years
|
Profit (£)
|
||
|
Sitka Spruce
|
European Larch
|
Lodgepole Pine
|
|
|
30
|
288000
|
132000
|
42500
|
|
40
|
443000
|
409200
|
286400
|
|
50
|
623000
|
798000
|
566000
|
|
60
|
764000
|
1124000
|
870200
|
|
70
|
1056800
|
1098000
|
1064000
|
|
80
|
834000
|
999000
|
1230800
|
|
90
|
735000
|
777000
|
1396000
|
|
100
|
596000
|
726000
|
1280000
|
Now, I made a table for 70 years, with each type of tree and with possible combinations, with the number of years left and the profit obtained.
|
Sitka Spruce
|
European Larch
|
Lodgepole Pine
|
Profit (£)
|
|
30
|
40
|
0
|
697200
|
|
30
|
0
|
40
|
574400
|
|
40
|
30
|
40
|
418400
|
|
0
|
40
|
30
|
451700
|
|
70
|
0
|
0
|
1056800
|
|
0
|
70
|
0
|
1098000
|
|
0
|
0
|
70
|
1064000
|
|
30+40
|
0
|
0
|
731000
|
|
0
|
30+40
|
0
|
541200
|
|
0
|
0
|
30+40
|
328900
|
The manager should plant the European Larch for 70 years, obtaining a profit of £1098000 per hectare.
I made a similar table for 90 years:
|
Sitka Spruce
|
European Larch
|
Lodgepole Pine
|
Profit (£)
|
|
90
|
0
|
0
|
735000
|
|
0
|
90
|
0
|
777000
|
|
0
|
0
|
90
|
1396000
|
|
30+30+30
|
0
|
0
|
864000
|
|
0
|
30+30+30
|
0
|
396000
|
|
0
|
0
|
30+30+30
|
127500
|
|
40+50
|
0
|
0
|
1066000
|
|
0
|
40+50
|
0
|
1207000
|
|
0
|
0
|
40+50
|
852400
|
|
60+30
|
0
|
0
|
1052000
|
|
0
|
60+30
|
0
|
1256000
|
|
0
|
0
|
60+30
|
912700
|
|
30
|
30
|
30
|
426500
|
|
40
|
50
|
0
|
1241000
|
|
40
|
0
|
50
|
1009000
|
|
50
|
40
|
0
|
1032200
|
|
0
|
40
|
50
|
975000
|
|
0
|
50
|
40
|
1084400
|
|
50
|
0
|
40
|
909400
|
|
60
|
30
|
0
|
896000
|
|
60
|
0
|
30
|
806500
|
|
0
|
60
|
30
|
1166500
|
|
30
|
60
|
0
|
1412000
|
|
0
|
30
|
60
|
1002200
|
|
30
|
0
|
60
|
1158200
|
The manager should plant the Sitka Spruce for 30 years, and
then the European Larch for 60 years.