《林业经济学》课程教学资源（PPT课件讲稿，英文版）Financial Analysis of Timber Investments

Financial Analysis of Timber Investments

Financial Analysis of Timber Investments

Financial Analysis of Timber Investments 1. MODERN FINANCIAL ANALYSIS OF TIMBER INVESTMENTS 2. EVOLUTION OF TIMBERLAND AS AN ASSET CLASS 3. CONCLUSION

Financial Analysis of Timber Investments 1. MODERN FINANCIALANALYSIS OF TIMBER INVESTMENTS 2. EVOLUTION OF TIMBERLAND AS AN ASSET CLASS 3. CONCLUSION

MODERN FINANCIAL ANALYSIS OF TIMBER INVESTMENTS o Capital budgeting Techniques Capital asset Pricing model o Timber Investment Analyses Using CAPM and Capital Budgeting Techniques e Timber investments and the efficient Frontier o Timber Investments and Option pricing

MODERN FINANCIAL ANALYSIS OF TIMBER INVESTMENTS u Capital Budgeting Techniques u Capital Asset Pricing Model u Timber Investment Analyses Using CAPM and Capital Budgeting Techniques u Timber Investments and the Efficient Frontier u Timber Investments and Option Pricing

Capital Budgeting Techniques The most often used capital budgeting criteria for forestry investments are the net present value (NPV), land expectation value (LEv), and internal rate of return (IRR)

Capital Budgeting Techniques uThe most often used capital budgeting criteria for forestry investments are the net present value (NPV), land expectation value (LEV), and internal rate of return (IRR)

Capital Budgeting Techniques NPy ∑B1(1+i)-1-∑C(1+i) o The NPv converts a series of periodic income flows to a single number that can be used to compare mutually exclusive investment alternatives over the same investment horizon at a given discount rate o A positive NPV would be accepted an investment if enough capital were available. If negative, one would reject that investment

Capital Budgeting Techniques          T t t t T t NPV B t i t C i 0 0 (1 ) (1 ) u The NPV converts a series of periodic income flows to a single number that can be used to compare mutually exclusive investment alternatives over the same investment horizon at a given discount rate. u A positive NPV would be accepted an investment if enough capital were available. If negative, one would reject that investment

Capital Budgeting Techniques ∑B(1+)--∑C(1+1)-1 LEV=t=0 (1-(1+1)-7 o The lev calculates the present value of an infinite series of projects(rotations). o LEV is applied just like NPV in making investment decisions, with positive LE Vs inferring investment acceptability and negative LEVs suggesting project rejection

Capital Budgeting Techniques u The LEV calculates the present value of an infinite series of projects (rotations). u LEV is applied just like NPV in making investment decisions, with positive LEVs inferring investment acceptability and negative LEVs suggesting project rejection. T T t t t T t t t i B i C i LEV              (1 (1 )) (1 ) (1 ) 0 0

Capital Budgeting Techniques ∑B(+/R)-1=∑C(1+/RR) t=0 t=0 The irr is defined as that discount rate that equates the present value of the benefits with the present value of the cost. Bt=a benefit at time t i=annual discount rate. Ct=a cost at time t, T=lifetime of project or rotation length

Capital Budgeting Techniques The IRR is defined as that discount rate that equates the present value of the benefits with the present value of the cost. Bt=a benefit at time t, i=annual discount rate, Ct=a cost at time t, T=lifetime of project or rotation length.         T t t t T t Bt IRR t C IRR 0 0 (1 ) (1 )

Capital Asset Pricing Model The traditional finance and relatively new forestry literature provides various overviews of the capital asset pricing model(CaPm) and its applications to forestry. 与具好的的带

Capital Asset Pricing Model uThe traditional finance and relatively new forestry literature provides various overviews of the capital asset pricing model (CAPM) and its applications to forestry

Capital Asset Pricing Model E(Rat rf+ Bae(Rmt-Rf Ratnominal rate of return of asset a in time t, Rft is the nominal rate of return of risk-free asset in time t. Ba is the index of nominal nondiversifiable risk of asset a Rmt is the nominal rate of return of the market portfolio in time t, and e is the expected value operator

Capital Asset Pricing Model Rat=nominal rate of return of asset a in time t, Rft is the nominal rate of return of risk-free asset in time t, Ba is the index of nominal nondiversifiable risk of asset a, Rmt is the nominal rate of return of the market portfolio in time t, and E is the expected value operator. E(Rat)  Rft  aE(Rmt  Rft)

Timber Investment Analyses Using CAPM and capital Budgeting Techniques o Wagner et al. (1995) analyzed typical forestry investments using capital budgeting techniques De Forest et al. (1991)showed that timber assets would be useful to add as a moderate component of a portfolio in order to enhance overall risk/return performance by CAPM

Timber Investment Analyses Using CAPM and Capital Budgeting Techniques u Wagner et al.(1995) analyzed typical forestry investments using capital budgeting techniques. u DeForest et al.(1991) showed that timber assets would be useful to add as a moderate component of a portfolio in order to enhance overall risk/return performance by CAPM