Discount rates used for forest valuation - Results of 2009 survey

Authors: Bruce Manley
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 2009, Issue N.Z.J.For. 54(4) 2010, pp 19-23, Jan 2010
Publisher: New Zealand Institute of Forestry

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Abstract: Fourteen forest valuers responded to the survey and provided information on 12 transactions between mid-2007 and 2009. The average reported IDR (implied discount rate) for each of these transactions was in the range 5.8 to 9.4% for post-tax cashflows and 7.1 to 10.7% for pre-tax cashflows. Overall averages were 6.9% (post-tax cashflows) and 8.6% (pre-tax cashflows), compared to 6.7% and 9.0% in the 2007 survey. Forest valuers also provided the discount rate they use to estimate the market value of a forest. They are using discount rates for forest valuation that are on average 0.3% lower than in 2007.

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