You are considering installing erosion control fences on a degraded rangeland parcel. The erosion control fences...

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You are considering installing erosion control fences on a degraded rangeland parcel. The erosion control fences are designed to reduce erosion, spread water and ultimately increase forage production (i.e. AUM). You value 1 AUM at $25. Installing erosion control fences will cost $7,300. You anticipate that in Year 1, there will be no increase in AUM, in Year 2 you will gain 45 AUM's, in Year 3 you will gain 60 AUM's (60 total, NOT 60 +45), in Year 4 you will gain 70 AUM's, and by Year 5 you will sustain an increase of 80 AUM's (AUM increase will stay at 80 for Y5 - Y12). You expect the erosion control fences to last 12 years. You estimate that annual maintenance costs for the fences are $150. For simplicity, assume the benefits of the fences will cease after 12 years and they have no salvage value. Expect a discount rate of 7%. Complete the following table. I encourage you to use Excel or Google Sheets. Year 0 1 2 3 4 5 6 7 8 9 10 11 12 Total Net Cash Revenue Average Net Revenue per Year Project A: Erosion Control Fences Annual Net Cash Revenue Total Net Present Value Present Value You are considering installing erosion control fences on a degraded rangeland parcel. The erosion control fences are designed to reduce erosion, spread water and ultimately increase forage production (i.e. AUM). You value 1 AUM at $25. Installing erosion control fences will cost $7,300. You anticipate that in Year 1, there will be no increase in AUM, in Year 2 you will gain 45 AUM's, in Year 3 you will gain 60 AUM's (60 total, NOT 60 +45), in Year 4 you will gain 70 AUM's, and by Year 5 you will sustain an increase of 80 AUM's (AUM increase will stay at 80 for Y5 - Y12). You expect the erosion control fences to last 12 years. You estimate that annual maintenance costs for the fences are $150. For simplicity, assume the benefits of the fences will cease after 12 years and they have no salvage value. Expect a discount rate of 7%. Complete the following table. I encourage you to use Excel or Google Sheets. Year 0 1 2 3 4 5 6 7 8 9 10 11 12 Total Net Cash Revenue Average Net Revenue per Year Project A: Erosion Control Fences Annual Net Cash Revenue Total Net Present Value Present Value

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