Question: You own forest land in California. You estimate that California's forest practice regulations will impact you financially in the following ways:
-Cost of a forest management plan is $100 per acre, to be obtained immediately.
-Additional harvesting cost to comply with the regulations: $250 per acre.
-Value of timber left standing after harvest to comply with regulations: $700 per acre.
-You plan to conduct two timber harvests: one five and another eight years from now.
-All costs and timber prices increase at the rate of inflation and are 2012 values.
-Your opportunity cost (in real terms) is 6 % per year.
What is the present value of the additional costs of California's forest practice regulations?