BENEFIT–COST ANALYSIS

Choose the cash-flow pattern.
Then choose the equation.

You do not need to memorize eight unrelated formulas. Follow three questions, see the cash flow on a timeline, and practice with forest-management decisions.

THE 3-QUESTION METHOD

How many?One cash flow or a series?
Where?Value now or in the future?
How often & how long?Annual/periodic; terminal/perpetual?

STEP 1

Build the story

Answer from left to right. The matching equation appears below.

1 Number of occurrences SingleOne revenue or cost SeriesEqual payments

2 Value to estimate FutureValue at year n PresentValue at year 0

3 Payment frequency AnnualEvery year, t = 1 PeriodicEvery t years

4 Length of series TerminalStops at year n PerpetualContinues forever

SINGLE · FUTURE

Compound a single amount

V_n = V₀(1 + i)ⁿ

Move one amount forward in time by compounding it for n years.

Forestry cue: What will today’s planting cost be equivalent to at harvest?

CASH-FLOW TIMELINE

payment pvalue sought

STEP 2

Formula field guide

Open a card to see when to use it and a common mistake.

STEP 3

Guided practice

Classify first, calculate second. Use the hint whenever you need it.

Question 1 of 8

A. Which equation fits?

B. Calculate the value

Round to the nearest dollar.

STEP 4

Mixed forest finance challenge

Five new questions are generated each round. No formula labels this time.

0/ 5

Question 1 of 5

WHEN YOU FEEL STUCK

Draw the timeline. Label year 0 and year n. Mark every payment.

The pattern on the timeline tells you which branch to follow; the equation is the last step.