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When Congress created the Bankruptcy Code in 1978, it left open several gaps that needed to be resolved through the judicial system. One of these gaps concerns the process behind the present-value analysis required by Section 1325, which states that debtors must pay creditors the present value of their claims over the course of the debtor's Chapter 13 bankruptcy plan. This process implicitly dictated that debtors must pay a discount rate to properly compensate their creditors. Because Congress never indicated how this discount rate should be calculated, bankruptcy courts created several different solutions to the problem. This left the bankruptcy system in a state of chaos as the rules varied substantially from district to district. In Till v. SCS Credit Corp., the Supreme Court attempted to tackle this problem and bring clarity to the situation but was unable to do so. The Court was split 4-4-1, which seemingly left the process for creating the Chapter 13 discount rate unclear. While many courts chose to treat the plurality decision as binding precedent, some bankruptcy courts created local rules that set a presumptive Chapter 13 discount rate to be used in all bankruptcy cases. These courts failed to see that Till did in fact reach a majority holding: A Chapter 13 debtor is presumed to satisfy their present-value burden when they pay a discount rate that is greater than or equal to the national prime rate. The creditor then bears the burden of showing that the discount rate should be higher. By setting a presumptive rate, the local rules created by bankruptcy courts shift at least part burden of proof onto the shoulders of debtors, who do not have reliable access to the information they need to litigate the claim and lower the discount rate. This Comment argues that these local rules violate the Rules Enabling Act because they alter the substantive rights of debtors. Burdens of proof are substantive aspects of a litigant's claim, and rulemaking committees that shift this burden are encroaching on Congress's rulemaking power. By setting a presumptive discount rate and giving the debtor burden to change it, debtors may be forced to pay more money over the course of their plans, therefore affecting their ability to repay their debts and obtain the financial relief that they are entitled to receive. [ABSTRACT FROM AUTHOR]

This paper develops a positive theory of trade credit based on its use as a financial response to deterministic variations in demand. The operating alternatives to trade credit, which include the use of storage or additional capacity, are modeled using results from the peak-load pricing literature. The paper shows that the extension of credit partitions the buyer's inventory cost and permits specialization at incurring the components of this cost. This specialization is economical when the seller has an advantage at incurring the financial cost and does not have an advantage at incurring the operating cost of accommodating variable demand. Conditions that provide these necessary and sufficient cost relationships are described. The paper also shows that a reduction in costs rather than an increase in revenues is the source of both the buyer's and seller's increase in wealth. [ABSTRACT FROM AUTHOR]

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The article examines a controversy surrounding the valuation of cash flows for a capital-budgeting decision. Typically separate valuations are determined for both the levered and unlevered cash flows of a project, with the former discounted by the weighted average cost of capital (WACC). Some have argued that WACC is the appropriate rate to use only for projects with either very short or infinite horizons. The authors investigate the case involving finite and variable cash flows, and assert that WACC works here as well.

This article compares the market value of highly leveraged transactions (HLTs) to the discounted value of their corresponding cash flow forecasts. For our sample of 51 HLTs completed between 1983 and 1989, the valuations of discounted cash flow forecasts are within 10 percent, on average, of the market values of the completed transactions. Our valuations perform at least as well as valuation methods using comparable companies and transactions. We also invert our analysis by estimating the risk premia implied by transaction values and forecast cash flows, and relating those risk premia to firm and industry betas, firm size, and firm book-to-market ratios. [ABSTRACT FROM AUTHOR]

The present value equation in finance is shown to be equivalent to the Laplace transformation in mathematics. Based on this observation, the list of known analytic solutions for the present value problem is increased from a handful to more than one hundred. General properties of the Laplace transform are examined as well in light of the newly discovered significance for finance. The purpose of this note is to alert the profession to this rich source of present value rules and to illustrate the enhanced problem-solving capabilities of the expanded bag of tricks. In particular, it is shown that assets with cyclical cash flows can have surprisingly simple representations. Present value rules for each of the elementary mathematical functions are identified in Section I. In Section II, general properties of the Laplace transformation are presented and discussed. These properties are then used in Section III to confirm the elementary rules and to show in Section IV how the simple rules can be combined to approximate the present value of complex cash flows. [ABSTRACT FROM AUTHOR]

The existing finance literature assumes the real operating cash flows from leasing or owning are invariant to the ownership of the asset and focuses on tax-related incentives for corporate leasing policy. Our analysis suggests that taxes are important in identifying potential lessees and lessors, but are less important in identifying the specific assets leased. We provide a unified analysis of the various incentives affecting the lease-versus-purchase decision. We then show how these incentives explain the use of contractual provisions such as maintenance clauses, deposits, options to purchase the asset, and metering. [ABSTRACT FROM AUTHOR]

The purpose of this paper is not to minimize the importance of the APV rule. Rather, it illustrates that what was suggested as constraints and limitations of the weighted average cost of capital can be relaxed. Note, that what has been proved above follows the APV approach and does not impair its usefulness. It confirms that the value of the textbook formula does not depend on the full set of assumptions listed by Myers. As long as eq. 2a holds, the pattern of flows will not diminish the validity of the textbook formula. [ABSTRACT FROM AUTHOR]

Empirical studies employing the term structure of interest rates have generally suffered from the defect that yield curves have been used as surrogate measures of the term structure. A number of scholars and professional bond analysts have, in the past decade, called attention to the problem (Malkiel [12], Buse [2], Weingartner [21], Homer and Leibowitz [8], and most recently Carr, Halpern and McCallum [4]) that only when the yield curve is flat can it be so used, legitimately. Only McCulloch [13] and Schaefer [18] have attempted to measure the term structure directly. In this paper we summarize briefly the analytical issues; suggest some of the uses to which term structure estimates could be put; propose an estimation method and describe some preliminary results; and finally, present an empirical application of term structure estimates in a stock valuation model. Most research papers conclude with a promise of more research. To a greater than usual degree the present paper is a promissory note because of the implications of our approach (and McCulloch's [13] and Schaefer's [18] for that matter) for a wide range of topics in financial and monetary economics. [ABSTRACT FROM AUTHOR]

The article expands upon commentary by Modigliani and Miller (M&M) about discounting cash flow streams. M&M described dividing such streams into "certain" and "uncertain" components, and then discounting each component by a suitable discount rate. The author of the current paper considers the circumstances under which it is appropriate to consider in isolation the constituent parts of a cash stream. Taking individuals to be utility maximizers, analysis is presented that shows the only correct division is the one between certain and uncertain cash flows proposed by M&M.

At various times over the last twenty years I have presented classes in finance with cases involving the choice between buying or leasing in acquiring a capital asset, and invariably I have been unhappy with the solutions proposed in the solution manuals and the literature as well as the ones presented by the students. However, my objections to these solutions did not lead to a model that represented a satisfactory general solution to the problem. I therefore read the recent paper on the subject by Johnson and Lewellen with a great deal of interest. Their review of the literature and formulation of the problem was undoubtedly facilitated by thinking on the subject because it has resulted in a model that I believe is both completely general and accurate. My model differs from the Johnson-Lewellen model more or less in the following four areas which are central to the correct treatment of the buy or lease decision: (1) the correct discount rate for a risk free cash flow; (2) a difference in term between the lease payments and the life of the capital asset; (3) differences in risk among the components of the buy and lease cash flows; and (4) neutralizing the implicit debt financing tied into the lease alternative. [ABSTRACT FROM AUTHOR]

Everyone seems to agree that there are significant interactions between corporate financing and investment decisions. The most important argument to the contrary--embodied in Modigliani and Miller's (MM's) famous Proposition I--specifically assumes the absence of corporate income taxes; but their argument implies an interaction when such taxes are recognized. Interactions may also stem from transaction costs or other market imperfections. The purpose of this paper is to present a general approach for analysis of the interactions of corporate financing and investment decisions, and to derive the approach's implications for capital investment decisions. Perhaps the most interesting implication is that capital budgeting rules based on the weighted average cost of capital formulas proposed by MM and other authors are not generally correct. Although the rules are reasonably robust, a more general "Adjusted Present Value" rule should, in principle, be used to evaluate investment opportunities. [ABSTRACT FROM AUTHOR]

The article presents a literature review of expansions and alternative normative stock price models based on common stock present value equality with discount values of dividend accrual. Various forms of modeling are given, highlighting different simplifications and specifications of growth patterns.

This article looks at several useful models for determining effective replacement policy that had been developed between 1954 and 1964. This article also explains how these models can be used as well as the nature of the accounting information used in their application. Five categories of methods used to determine when to replace industrial equipment are examined. Present value models are presented which both consider and exclude capital costs. The author discusses the non-linear maintenance cost function used in several methods. The consideration of corporate income taxes are also discussed.

The article provides a mathematical foundation for the Excess Present Value Index (EPVI), examining its properties to accurately state the limitations which must be imposed on its use in investment decisions. EPVI is defined as the ratio of present value of cash inflows to the initial outflow. The author looks at derivations of the EPVI. Methods of interpreting and determining the appropriate cutoff are reviewed. Mutually exclusive alternatives to using the EPVI are considered. It is noted that in situations where capital expenditures are limited, the EPVI criterion will require qualification.

While uncertainty regarding future returns is explicitly considered in current literature on project evaluation, insufficient attention has been given to the dynamic nature of the investment decision process. The set of feasible alternatives changes over time and is not known in advance, making flexibility to pursue newly emergent investment opportunities a highly valued property of decision alternatives. Yet this concept is generally considered only in a casual and intuitive manner, and no attempts have been made thus far to incorporate it formally into capital budgeting procedures. To explicitly take account of changes over time in the set of feasible investment projects, standard measures of investment worth--such as the widely used net present value criterion--require modification. Given such changes, the economic desirabilty of a proposition will depend not only on its probabilistic future cash flows, but also on the decision-maker's probabilistic beliefs about the future composition of the set of feasible opportunities. New investment opportunities need not be conflicting with existing projects; a budget constraint may simply preclude new investments. By deriving the expected present value of postponement based on the investor's expectations about future opportunities, optimal investment policies were first derived based on the simplifying assumption of no divesture. Subsequently, premature abandonment of existing projects in order to take advantage of new opportunities was allowed for. While explicit mathematical analysis may not be operationally feasible--largely because of difficulties in obtaining probability density distributions of future events--first estimates derived from a graphic analysis such as the one presented may provide a useful start. In any case, it is expected that an awareness of the limitations of present tools for project evaluation will aid in both promoting their correct use and the adequate interpretation of any results. [ABSTRACT FROM AUTHOR]

We have argued that the customary analysis of the lease-or-buy decision is incorrect because it includes financing charges in the cash flows. Additionally, inadequate recognition is commonly given to differences in the risks of obtaining various elements of those flows. Finally, the decision process is incomplete if projects are rejected solely on the basis of comparing the present value of owning versus the present value of not owning. We have cast the decision here as lease-or-buy, rather than lease-or-borrow, thereby excluding explicit financing costs from the capital budgeting decision. After-tax cash flows whose predictability matches that associated with the firm's debt service obligations should be capitalized at the firm's after-tax borrowing rate. After-tax cash flows whose uncertainty is like the general risks faced by the firm in its line of business should be discounted at the firm's cost of capital. Pursuant to those calculations, a decision to reject acquisition of the services of an asset should be withheld pending a determinization of whether a proffered lease arrangement is sufficiently more favorable than ownership to justify an affirmative response. [ABSTRACT FROM AUTHOR]

At least three general methods exist for the treatment of risk in capital budgeting problems. Most textbooks include a discussion of the risk adjusted discount method (RAD) and certainty equivalent method (CE), although neither is adopted as ideal for evaluating investment proposals. In view of the alleged weaknesses of the RAD and CE methods, it is understandable that a third approach has emerged. This approach, which will be called the single certainty equivalent (SCE) method, includes many variations but is based upon a technique first introduced by Hillier. [ABSTRACT FROM AUTHOR]

The contemporary models of real estate investment analysis all are grossly inadequate and are incapable of generating realistic estimates of the over-all rate of return on a real estate investment and the risk of that investment. This paper has presented a method by which an analyst may realistically quantify his intuitive beliefs about the possible future profitability of a real estate property and may then have these intuitive beliefs transformed into statistically reliable estimates of the results of the investment by the use of a computerized analytical model which relies upon Monte Carlo simulation and statistical tests of validity. [ABSTRACT FROM AUTHOR]

The purpose of the present note is to examine the firm's investment criterion assuming that firms transact in perfect capital markets but that individual investors do not. Borrowing and lending rates are assumed to differ for individuals but not for the firm. Although the value of the firm may be dependent upon dividend policy under these assumptions, it is shown that the maximization of the present value of the firm's cash flow from investment is still the appropriate investment rule. However, the appropriate discount rate is that faced by the firm in its capital markets. [ABSTRACT FROM AUTHOR]

The author reports on the importance of capital investment decisions for an organization. The importance of making appropriate capital investment decisions for the success of an organization is discussed. Ideas expressed in the book "Risk Analysis in Capital Investment," by David B. Hertz are discussed. The way in which the project's risk is gauged is discussed. Benefits and drawbacks regarding the simulation approach in the appraising of investment proposals are discussed. Other ways in which risks can be dealt with are mentioned.

Based on a family of discrepancy functions, we derive nonparametric stochastic discount factor bounds that naturally generalize variance, entropy, and higher-moment bounds. These bounds are especially useful to identify how parameters affect pricing kernel dispersion in asset pricing models. In particular, they allow us to distinguish between models where dispersion comes mainly from skewness from models where kurtosis is the primary source of dispersion. We analyze the admissibility of disaster, disappointment aversion, and long-run risk models with respect to these bounds. Keywords: stochastic discount factors * information-theoretic bounds * robustness * minimum contrast estimators * implicit utility maximizing weights, 1. Introduction Observed asset returns provide information about how future cash flows are discounted. This is the fundamental insight of Hansen and Jagannathan (1991; hereinafter HJ), who derived a minimum [...]

This paper describes how the discount rate used in present value calculations expresses the preference for sustainability in decision making, and its implication for sustainable economic growth. In essence, the lower the discount rate, the greater the regard for the future, and the more likely we choose behaviors that lead to long-term sustainability. The theoretical framework combines behavioral economics and holonomics, which involve limitations of regard for the future due to constraints on processing uncertainty. An alternative formulation for present value calculations, which includes a survival function, is developed. A taxonomy of institutions based on discount rate is proposed. [ABSTRACT FROM AUTHOR]

In a recent article, Enrique Arzac and Matityahu Marcus [1] develop a flotation cost adjustment for the allowed rate of return of a regulated firm based on the classic growth model of Miller and Modigliani [3] and Gordon [2]. However, the model from which their adjustment formula was obtained violates the exogenously given investment pattern of the utility. In consequence, their adjustment consistently overcompensates for flotation costs. The purpose of this comment is to derive the correct regulatory adjustment for flotation costs in the context of the Gordon growth model. [ABSTRACT FROM AUTHOR]

Arditti [1974], in examining the conditions under which an income stream may be broken up into component parts and each discounted by the rate appropriate to that stream if it were viewed in isolation, reaches the conclusion that the method is appropriate only when a stream is broken up into two substreams, one certain and the other uncertain. While this is a sufficient condition, it is shown that under Arditti's special assumptions it is not a necessary condition. Furthermore, when these assumptions are relaxed, it is not even a sufficient condition. Arditti [1974], in examining the conditions under which an income stream may be broken up into component parts and each discounted by the rate appropriate to that stream if it were viewed in isolation, reaches the conclusion that the method is appropriate only when a stream is broken up into two substreams, one certain and the other uncertain. While this is a sufficient condition, it is shown that under Arditti's special assumptions it is not a necessary condition. Furthermore, when these assumptions are relaxed, it is not even a sufficient condition. [ABSTRACT FROM AUTHOR]

Professor Bar-Yosef presents the traditional argument for the textbook formula in a dear and relatively elegant way. Unfortunately, he fails to recognize an important implicit assumption of that argument, namely that the appropriate cost of capital for a firm or asset depends on its cash flow pattern. On the other hand, he is right to criticize my list of "necessary and sufficient" assumptions for using the textbook formula as a capital budgeting standard. Instead of the three assumptions noted above, I should have concluded as follows. The textbook formula gives a valid hurdle rate, at least in certain special cases, if the project under consideration has the same cash flow pattern as the firm. Three special cases have been identified thus far. They occur when (1) the firm is entirely composed of one-period assets, when (2) the firm is a perpetuity, and when (3) the firm is on a steady-state growth path (C[sub t] = C[sub 1](1 + g)[sup t-1]). The third case was not mentioned in my paper, but its existence is clear from Bar-Yosef's proof. [ABSTRACT FROM AUTHOR]

The article compares the expected value and expected future value criterion used by investors, from the viewpoint of project evaluation. When capital markets are imperfect or the cost-of-capital is uncertain, the two criteria will differ in their results. The implications of these varying recommendations in portfolio selection is discussed. The analysis presented concentrates on a risk-neutral investor only interested in expected values of wealth. Some guidelines to investment decision making gathered from research are described.

This paper investigates whether extending the intertemporal model of the current account to allow for variations in the terms of trade improves its ability to fit the data. It derives a testable present-value representation of the current account that encompasses the Harberger-Laursen-Metzler (HLM) effect, according to which a temporary rise in the terms of trade improves the current account. The present-value model is tested using data from Australia, Canada, and the United Kingdom. The results show that terms-of-trade movements do not affect the current account in a significant way, and that, in two of the three cases, the model is strongly rejected by the data. JEL classification: F32; F41 Keywords: Current account; Terms of trade; Present-value model

The article discusses the study on the dynamics and time frames of the post war economic recovery. Topics discussed include the impact of the economic losses on the growth of the gross domestic product (GDP), the use of the empirical analysis on the GDP, and the use of simple present value model in the analysis.

Standard present-value models suggest that exchange rates are driven by expected future fundamentals, implying that exchange rates contain information about future fundamentals. We test this key empirical prediction of present-value models in a sample of 35 currency pairs ranging from 1900 to 2009. Employing a variety of tests, we find that exchange rates have strong and significant predictive power for nominal fundamentals (inflation, money balances, nominal GDP), whereas predictability of real fundamentals and risk premia is much weaker and largely confined to the post-Bretton Woods era. Overall, we uncover ample evidence that future macrofundamentals drive current exchange rates. [ABSTRACT FROM AUTHOR]

An analysis of US stock markets post war shows that expected returns vary based on time and similar variation in dividend growth rate too is anticipated by the stock markets. This expected dividend growth rate may or may not be supported by dividend-price ratio. The relationship between dividend forecasts and forecasts of excess stock returns in business cycles is also examined.

A method of calculating the weighted average cost of capital by adjusted present value and net present value is presented. A comparative analysis of the WACC calculated in the said manner is also presented.

Copyright of Research Papers of the Wroclaw University of Economics / Prace Naukowe Uniwersytetu Ekonomicznego we Wroclawiu is the property of Uniwersytet Ekonomiczny we Wroclawiu and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Using a dynamic version of the present value model and a range of developed and Asian emerging markets, this article considers estimates of stock market prices given expectations on dividends and earnings and compares these fundamental stock prices with actual stock prices. The reported empirical results suggest that a dynamic present value model combined with differing definitions of cash flows can explain actual stock price movements for many of the sample markets. For markets where price deviations from fundamental value are statistically significant, the revealed deviations are investigated by considering types of investor behaviour which might drive such departures. [ABSTRACT FROM AUTHOR]

We propose a latent variables approach within a present-value model to estimate the expected returns and expected dividend growth rates of the aggregate stock market. This approach aggregates information contained in the history of price-dividend ratios and dividend growth rates to predict future returns and dividend growth rates. We find that returns and dividend growth rates are predictable with values ranging from 8.2% to 8.9% for returns and 13.9% to 31.6% for dividend growth rates. Both expected returns and expected dividend growth rates have a persistent component, but expected returns are more persistent than expected dividend growth rates. [ABSTRACT FROM AUTHOR]

Evidence regarding the validity of the present value model for stock prices has typically been assessed at index level. Moreover, such research typically rejects the model. In contrast research at the firm level is more supportive of the model. This paper, using the present value model as the base for analysis, considers sector level data. Three main objectives motivate the paper. First, to fill the gap in the research noted above. Second, to see if the recent technology bubble affected all other sectors. Third, to examine returns predictability using the present value model adjusted for the presence of bubbles. The results suggest, first, only limited support for the simple present value model, supporting the notion that as data are aggregated then the information content of dividends becomes obscured. Second, that the late 1990s bubble affected all sectors with the exception of the more traditional industrial sectors, which have seen significant price rises following the end of the early 2000s bear market. Third, a regime switching model that incorporates both a fundamental and bubble component demonstrates that when the bubble component is small the dividend yield acts as a reasonable predictor of sector returns, however, when the bubble is large prices become disconnected from dividends. The results here inform our knowledge of the present value model and should be of interest both to researchers attempting to model market behaviour and investors attempting to forecast it. [ABSTRACT FROM AUTHOR]

According to several empirical studies, the linear present-value model fails to explain the behaviour of stock prices in the long run. We analyse the possible presence of threshold cointegration between real stock prices and dividends for the US market during the period from 1871:1 to 2004:6. According to our results, the null hypothesis of linear cointegration between stock prices and dividends is rejected in favour of a two-regime threshold cointegration model. We find also that stock prices do not respond to equilibrium error, and dividends respond to the past divergence only if the deviation from the equilibrium error does not exceed the estimated threshold parameter. This in turn would support theoretical models assuming that the stock price-dividend relation is nonlinear. [ABSTRACT FROM AUTHOR]

The canonical New Keynesian Phillips curve specifies inflation as the present-value of future real marginal costs. This paper exploits projections of future real marginal costs generated by VAR models to assess the model’s ability to match the behavior of actual inflation in the Euro area. The model fits the data well at first sight. A set of bias-corrected bootstrapped confidence bands, however, reveals that this result is consistent with both a well fitting and a failing model. These findings also hold for the hybrid version of the Phillips curve. [ABSTRACT FROM AUTHOR]

The article presents a modeling tool that lets firms compare the cost of leasing CPU time through cloud computing services with that of acquiring an information-technology service cluster. Cloud computing services are available from a number of vendors including Amazon.com and Google Inc. at a quoted price per CPU hour. Using net-present-value techniques the author shows how to calculate the value of a purchased server cluster, then derives formulas for the cost of one CPU hour in the separate cases of a purchase, a lease, and a purchase-upgrade. INSET: CALCULATING A PURCHASED SERVER CLUSTER'S NET PRESENT VALUE.

We suggest a new approach to calculating a project's net present value, termed the displaced equity method. Based on a straightforward formula, it analyzes a project partially financed with debt from the perspective that every year the amount of outstanding debt displaces an equivalent amount of equity that otherwise would be tied up in the project. Although they represent distinct shareholders' perspectives, the displaced equity method and the equity residual method yield identical net present values and internal rates of return. Every year, the project's value calculated with the displaced equity method is equal to the sum of the project's debt and equity values. In practice, when the schedule of expected outstanding debt amounts is known, using the displaced equity method is an easy way to estimate the project's net present value. [ABSTRACT FROM AUTHOR]

Copyright of Revue d'Economie Politique is the property of Editions Dalloz Sirrey and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The paper aimed to present a comparison concerning feasibility of the three variants of production integration: in a family reproduction sericicultural farm based on Present Value Method. The compared variants are : VI -- CDVM -- Control variant: Mulberry tree culture and Silk worm rearing, without integration with silk cocoon processing ;V2 -- CDVMP5 -- Experimental integrated variant between Mulberry tree culture, Silk worm rearing and Silk cocoon processing (unreeling cocoons) in handicrafts (knitted belts--P5); V3 -- CDVMP10 -- Experimental integrated variant between Mulberry tree culture, Silk worm rearing and Silk cocoon processing (unreeling cocoons) in handicrafts (Decorative picture--Pl0). Based on Net Present Value, the variant V2 -- CDVMP5 is the most profitable one, a reason to recommend it to sericiculturists if they intend to get more income. [ABSTRACT FROM AUTHOR]

The article presents a study on the short-rotation hardwood plantation and its cost effectiveness in comparison to "green" inventory. Three southeastern U.S. pulp mills were studied in a net present value analysis. Short-rotation hardwood plantations of eastern Populus deltoides ot cottonwood were simulated to replace a part of remote woodyard inventory, with wood brought to a pulp mill from the "green" inventory only when pulp mill inventory levels became critical. Results shows that short-totation plantations were not cost effective as "green" inventory. However, all three pulp mills could have decreased overall wood cost by establishing a fiber farm, if yield could be increased to almost 33% through genetic or cultural enhancements.