LamLum: A Tool for 

Evaluating the Financial 

Feasibility of Laminated 

Lumber Plants 

E.M. (Ted) Bilek

John F. Hunt

United States

Department of

Agriculture

Forest Service

Forest

Products

Laboratory

General

Technical 

Report

FPL–GTR–165
July 2006

Bilek, E.M. (Ted); Hunt, John F. LamLum: A tool for evaluating the financial feasibility of laminated lumber plants. Gen. Tech. Rep. FPL-GTR-165. 

Madison, WI: U.S. Department of Agriculture, Forest Service, Forest 

Products Laboratory. 33 p.

A limited number of free copies of this publication are available to the 

public from the Forest Products Laboratory, One Gifford Pinchot Drive, 

Madison, WI 53726–2398. This publication is also available online at 

www.fpl.fs.fed.us. Laboratory publications are sent to hundreds of libraries 

in the United States and elsewhere.

The Forest Products Laboratory is maintained in cooperation with the 

University of Wisconsin. 

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and does not imply endorsement by the United States Department of 

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Abstract

A spreadsheet-based computer program called LamLum

was created to analyze the economics of value-added 

laminated lumber manufacturing facilities. Such failities 

manufacture laminations, typically from lower grades of 

structural lumber, then glue these laminations together 

to make various types of higher value laminated lumber 

products. This report provides the documentation for 

LamLum. LamLum may be downloaded from the USDA 

Forest Service, Forest Products Laboratory, website (www.

fpl.fs.fed.us/documnts/fplgtr/fpl_gtr165/fpl_gtr165.html). 

Extensive screenshots from the program are presented in 

this documentation.

LamLum incorporates discounted cash flow analysis to 

determine under what conditions a laminated lumber plant 

might be profitable. LamLum can also be used to aid in 

payroll and employment planning. Break-even analysis is 

incorporated to calculate the maximum amount that may be 

paid for laminations while still returning the required rate of 

return on invested capital to owners.

Plant and equipment, raw materials, wages, administration 

costs, and working capital are linked to provide cash flow 

tables and summary financial measures for profitability 

analysis. A summary cash flow chart and a pie chart 

showing key cost categories simplify analysis. In addition to 

cash flows and basic financial measures, LamLum provides 

physical product flows with respect to both wood inputs and 

wood product outputs.

LamLum is structured so that users may easily perform a 

sensitivity analysis on revenues and key costs without going 

into the detailed assumptions. Cost contingency factors 

allow major cost categories to be changed independently of 

the sensitivity analysis. Products, species and grades, and 

lamination costs may be changed over time to allow for 

changing resource requirements or availability and thereby 

provide flexibility in planning. Extensive built-in annotation 

in the spreadsheet provides guidance and help. Built-in 

warnings and error messages help reduce input errors and 

inform users when and why their results might not be 

believable.

Keywords: laminated lumber, discounted cash flow analysis, 

project analysis, break-even analysis, financial analysis, 

profitability analysis, spreadsheet program.

Contents

Introduction..........................................................................1

LamLum Features.................................................................1

LamLum Structure................................................................2

 Preliminary Worksheets...................................................2

 Summary Worksheets ..................................................... 2

 Primary Input Assumptions Worksheets......................... 5

 Costing Worksheets......................................................... 8

LamLum Assumptions........................................................ 11

Appendix—Laminated Lumber Plant User-Defined 

 Inputs by Worksheet....................................................... 12

LamLum Screenshots.......................................................... 20

Acknowledgments

This research was initially supported by a grant from 

the National Fire Plan. The authors thank the staff of 

Wyoming Sawmills, especially Ken Grant for his thoughtful 

review of the model and helpful suggestions regarding its 

development. Any errors or omissions remain those of the 

authors. Please address any comments or suggestions to the 

authors.

Where to get more information: Study this manual to 

become familiar with the terminology and concepts used. 

For further general information or to obtain assistance 

with problems you may encounter while using this model, 

contact: E.M. (Ted) Bilek, USDA Forest Service, Forest 

Products Laboratory, One Gifford Pinchot Drive, Madison, 

WI, 53726–2398, email: tbilek@fs.fed.us, telephone: (608) 

231–9507.

LamLum is intended to facilitate the evaluation of the 

economics of laminated lumber plants. While this model 

has undergone exhaustive testing to ensure its integrity, the 

Forest Service cannot guarantee its accuracy or suitability 

for use. This model relies on user-provided projections. 

Accuracy of data collection, data entry, and interpretation 

of results are the responsibility of the user. Neither the 

author nor the Forest Service will accept responsibility for 

financial losses that may result from the use of the model.
Introduction

Laminated lumber is an engineered wood product with 

known physical properties. It is manufactured from laminations that are typically cut from lower grades of structural 

lumber. These laminations are then glued together to form 

various types of higher valued products with superior 

engineering properties. Laminated lumber products have 

minimum variability, making them easy to incorporate into 

engineering design and easy to build with. They provide opportunities to utilize species and grades that may otherwise 

be underutilized by adding value to them. This effectively 

expands wood supplies and can aid in forest conservation 

by reducing pressure on larger, more popular species and 

providing opportunities to perform forest health treatments 

to areas that otherwise would be too costly to treat.

This report describes the documentation for LamLum, an 

integrated spreadsheet model that was developed to analyze 

investments in laminated lumber plants. The model is available for downloading from the Forest Products Laboratory 

website (www.fpl.fs.fed.us documnts/fplgtr/fpl_gtr165/

fpl_gtr165.html). Sample data are presented that can be used 

to test the power and flexibility of the model. However, the 

results presented do not represent those of an actual laminated lumber plant, and users should enter their own data. 

The quality and accuracy of any given analysis will depend 

on the quality of the data.

The model should be of interest to anyone currently manufacturing laminated lumber or laminated lumber products. 

It should also be of interest to anyone considering investing in such a facility. The outputs produced from the model 

could form the core of a business plan for such investments. 

Components of the model may be used to minimize costs in 

specific areas. With LamLum, an analyst can determine how 

much can be paid for inputs while still providing a required 

rate of return.

LamLum is an integrated financial model designed to evaluate the economics of building and operating a laminated 

lumber plant over a 20-year planning period. It determines 

cash flows before-tax and finance, before tax, and after tax. 

The model calculates net present values and internal rates of 

return. It calculates maximum break-even lamination input 

costs to provide a specified after-tax rate of return. It also 

provides physical product flows. It can be used to aid in 

payroll and employment planning as well as in profitability 

and feasibility analysis.

LamLum is spreadsheet-based, created in Microsoft Excel 

(Redmond, Washington), giving it a familiar interface, 

making it flexible, and providing it with all the built-in 

power of spreadsheet applications. The model is organized 

around worksheets that may be easily replaced or updated, 

which renders the model modular. All inputs that are utilized 

by several worksheets are fully integrated so that inputs 

need to be changed only once to give updated costs and 

results, which helps to minimize data input errors. In this report, all data that must be input manually appear in boldface 

type on the worksheet screenshots; these data appear in blue 

type in the computer program. The screenshots appear at the 

end of this report.

Several inputs on the FINANCIAL SUMMARY worksheet 

allow the user to easily see the impacts of changed contingency assumptions or cost or revenue assumptions. The 

FINANCIAL SUMMARY worksheet also includes inputs that 

allow the user to do a full sensitivity analysis without leaving this page. The impacts of changing economic conditions 

or assumptions may be quickly and easily explored, with the 

results immediately seen in terms of net present values and 

internal rates of return. Summary built-in charts provide information at a glance regarding profitability and cash flows.

A basic understanding of discounted cash flow analysis is 

required for understanding the kinds of outputs provided 

by LamLum, their significance, and the reasons they change 

when certain variables are altered. Some understanding of 

accounting and depreciation is also helpful, but such knowledge is not essential for using this model.

LamLum is extensively annotated with comments in many 

spreadsheets. In this report, the Appendix shows inputs required to assemble a costing model. In the following paper, 

we describe the main features of LamLum, the structure of 

the model, and assumptions. 

LamLum Features

The LamLum model includes the following features:

• Up to 10 laminations or lumber input grades, each with 

different costs and recoveries

• Up to 6 product output grades in addition to 

merchantable and unmerchantable residues

LamLum: A Tool for Evaluating the Financial 

Feasibility of Laminated Lumber Plants

E.M. (Ted) Bilek, Economist

John F. Hunt, Research Engineer

Forest Products Laboratory, Madison, Wisconsin
 General Technical Report FPL–GTR–165

2

• Separate accounting for process 

equipment, land, and buildings

• Up to 8 types of rolling stock

• Straight-line or diminishing value depreciation methods 

or a user-specified custom rate

• Two methods for automatically calculating terminal

values

• Option to purchase or lease land and buildings

• Flexibility in scheduling shifts and administrative 

requirements

• Flexibility in lamination input and output mixes over 

time

• Flexibility and power in entering product prices and 

input costs; prices or costs can be entered once and 

increase automatically with inflation or can be entered 

manually for each year

• Comprehensive financial analysis showing 20‐year cash 

flows as well as net present values and internal rates of 

return 

• Integrated sensitivity analysis factors to facilitate simple 

performance of a complex analysis 

• Integrated contingency factors so that capital costs, direct 

production costs, fixed costs and overheads, or working 

capital may be adjusted separately from sensitivity 

analysis

• Extensive annotated notes, warnings, and error messages 

to guide inputs

• No macros, so model may be downloaded

LamLum Structure

The LamLum model consists of 18 worksheets and 2 charts: 

• Three preliminary worksheets 

• Two summary worksheets and two charts 

• Three primary input assumptions worksheets 

• Ten costing worksheets 

The model’s main structure is shown in Figure 1. Nine 

specialized costing worksheets feed into Consolidated 

Operating Costs. Production Revenues, Laminations Costs 

& Conversions, and Consolidated Operating Costs feed into 

the CASH FLOW SUMMARY. The numbers from the CASH 

FLOW SUMMARY are used to produce the CASH FLOW 

CHART. These numbers are also consolidated into present 

values in the FINANCIAL SUMMARY. The numbers from 

the FINANCIAL SUMMARY are used to produce the SUMMARY PIE CHART. Figure 1 does not include the preliminary worksheets or the general assumptions worksheet. The 

remainder of this section is a more detailed discussion of the 

contents of each worksheet.

Preliminary Worksheets 

The three preliminary worksheets contain the Title, Introduction, and Contents. The Title page contains notes of 

changes since the last revision of the model. The Introduction contains some brief background to the model. The 

Contents page describes the worksheets.

Summary Worksheets

The Summary worksheets consist of the FINANCIAL SUMMARY, SUMMARY PIE CHART, CASH FLOW CHART, and 

CASH FLOW SUMMARY. In this report, the titles of these 

worksheets are set in capital letters and italics to distinguish 

these worksheets in the Excel workbook. 

Financial Summary

The FINANCIAL SUMMARY worksheet consolidates the 

analysis results. It represents the bottom line, containing the 

final costs, calculated rates of return, and financial indicators in present value terms. It also contains the input variables for conducting a sensitivity analysis. Cost contingency 

variables allow the analyst to alter various categories of 

costs outside the sensitivity analysis. The key cost-of-capital 

variables contain the pre-tax required return premium on 

risk capital and the debt to total capital ratio. The optional 

summary laminations input cost may be used to test various 

break-even scenarios. (See section on Laminations Costs & 

Conversions for a description of how to run a break-even 

analysis.)

Tables in the FINANCIAL SUMMARY worksheet include 

Financial Indicators, Revenue & Cost Summary, BreakEven Summary, Sensitivity Analysis Scaling Factors and 

Cost Contingency Allowances, Costs of Capital, Discounted 

Costs and Profit (Loss) as Percentage of Sales, and Present Value of Throughput. The Financial Indicators table 

(Screenshot 1) includes net present values (NPVs)1 and 

internal rates of return (IRRs).2 The IRR values are shown 

both as nominal percentages, including inflation, and real 

1Net present value (NPV) is the difference between the positive

and negative cash flows of a project discounted to the present (that 

is, adjusted for interest) at the weighted average cost of capital 

(an interest rate, also known as the discount rate). If an NPV is 

positive, the project is earning a rate of return higher than the 

discount rate used to calculate the NPV. If an NPV is negative, the 

project is earning a rate of return lower than the discount rate used 

to calculate the NPV. Other literature may refer to this calculation 

as the net present worth (NPW) or the present net worth (PNW). 

All terms refer to the difference between the project benefits and 

costs when both are discounted at an appropriate rate. A project 

may have a negative NPV and still be “profitable” in terms of 

accounting. For example, a project earning a return of 7% on its 

invested capital would show a negative NPV if those cash flows 

were discounted at a rate greater than 7%.

2The internal rate of return is an interest rate that, when used to

discount project cash flows, produces an NPV = $0.
LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

3

percentages, not including inflation. Since NPV is identical in either real or inflation-adjusted terms, only one set 

of NPV figures is shown. Both NPVs and IRRs are shown 

before tax and finance, before tax, and after tax.3

The IRR seed is a variable to be entered by the analyst. It 

is a starting point for the IRR calculations of the program. 

If a series of cash flows has multiple IRRs, varying this 

seed may help to determine what they are. Multiple IRRs 

can occur if the project’s net cash flows change signs more 

than once; for example, from negative to positive to back to 

negative. 

The Revenue & Cost Summary table (Screenshot 2) 

contains present values of the revenue and all major cost 

categories. These present values are provided in terms of 

total dollars and dollars per unit (thousand board feet (MBF) 

of input). All costs are also given as a percentage of sales so 

that the user may see which cost categories are the most significant. The after-tax NPV represents after-tax profit (loss) 

over and above the owners’ after-tax real weighted average 

cost of capital (WACC).4 If the after-tax NPV = $0, then the 

real IRR will be equal to the after-tax real WACC. An NPV 

of $0 means that the owners are covering their costs and are 

earning exactly the interest rate they have required the project to pay them, no more and no less. This is a key concept 

for break-even analysis.

The Break-Even Summary table (Screenshot 3) contains the 

calculated break-even laminations cost. This represents the 

maximum average amount at the start-up of the project that 

could be paid for input laminations and sorting costs, while 

still providing the specified after-tax return on capital. The 

break-even laminations cost calculation is only an approximation because of the circular relationship between working 

capital and costs. However, the optional summary laminations input cost can be used to determine how much can be 

paid for an individual input grade. The break-even values 

are provided at start-up (year 0) and at the end of the first 

year of operation (year 1).

The Discounted Costs and Profit (Loss) as a Percentage of 

Sales table (not shown) consolidates figures from the Revenue & Cost Summary. It provides the input figures for the 

SUMMARY PIE CHART, which will be discussed later.

The Present Volume of Throughput table (not shown) comes 

from the Laminations Costs & Conversions worksheet. It is 

a discounted figure necessary to calculate accurate average 

unit costs.

The FINANCIAL SUMMARY worksheet contains input options for running a sensitivity analysis (Screenshot 4). The 

sensitivity analysis scaling factors may be changed from 

100% to view the impact of changes in costs or revenues 

on NPVs, IRRs, and cash flows. For example, to see what 

happens if wage costs are 10% higher than the input figures, 

change the wage scaling factor to 110%. If wage costs are 

10% lower than the input figures, change the wage scaling 

3Before-tax NPV is calculated using before-tax cash flows and a

tax-adjusted after-tax weighted average cost of capital (WACC) 

for the tax rate. The formula to calculate the before-tax WACC is: 

Before-tax WACC = After-tax WACC/(1 − Tax rate).

4The cost of inflation is removed from a “real” cost of capital or

interest rate. In contrast, a “nominal” rate includes inflation.

Laminations costs 

& conversions

FINANCIAL

SUMMARY

CASH FLOW

SUMMARY

Consolidated

operating costs

Land & 

buildings

Process equipment 

& outputs

Worker

accessories

Administration Wages

Rolling Other costs stock

Miscellaneous

equipment

Production

revenues

Net profit, 4.7%

Laminations costs

Direct production costs

Fixed costs and overheads

Financing costs

Taxes

Net profit

Laminated lumber plant: 

Discounted costs and profit (loss) 

as a percentage of sales

Laminated lumber plant: cash flow summary

$(4,000,000)

$(2,000,000)

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Year

Annual cash flow ($) Cash flow before tax and finance

Cash flow before tax

After tax cash flow

Working

capital

SUMMARY PIE

CASH FLOW CHART CHART

Figure 1—The structure of LamLum main worksheets.
4

factor to 90%. To eliminate a cost, set its sensitivity analysis 

scaling factor to 0%.

Related to the sensitivity analysis scaling factors are the 

cost contingency allowances (Screenshot 4), which allow 

the user to provide an extra percentage over and above 

the given costs as an overrun allowance without having to 

adjust the scaling factors. The cost contingency allowances 

add a percentage to a cost category and are incorporated in 

the Consolidated Operating Costs worksheet. These cost 

contingency factors are provided to allow the scaling factors 

to be used for sensitivity analysis and not for ordinary cost 

estimation. If there is no doubt about the “best guess” cost 

input, then the contingency factor should be set to 0%.

The pre-tax required return premium on risk capital 

(Screenshot 5) is a rate above the bank’s “safe” deposit 

interest rate. It allows the analyst to easily determine the 

impact of changing risk premiums on break-even input costs 

and profitability. The cost of capital is a function of the risk 

premium, “safe” deposit rate, borrowing rate, and debt/total 

capital ratio. It is set up in this way so that if bank interest 

rates change, the analyst does not have to remember to also 

change the cost of capital. It will automatically be adjusted 

to reflect new rates or new capital structures.

The “Debt/Total capital” input on the FINANCIAL SUMMARY worksheet (Screenshot 5) allows the analyst to easily 

see the impact of changing the operation’s financing on the 

financial summary and the break-even costs. The costs of 

capital are on the worksheet simply for reference.

Summary Pie Chart

The SUMMARY PIE CHART graphs some cost and profit 

(loss) data from the FINANCIAL SUMMARY worksheet to 

enable the analyst to see at a glance those costs that are most 

significant. Figure 2 shows a sample graph.

The SUMMARY PIE CHART summarizes all cash flows for 

all years. The net profit or loss is expressed in terms of NPV. 

That is, it represents a return either greater or less than the 

owners’ cost of capital. The example (Fig. 2) indicates that 

the owners are recovering all their costs, including interest 

and their required risk premium on their invested capital; 

they will also be earning an additional 3.8% on their sales 

over the life of the project.

Cash Flow Chart

The CASH FLOW CHART (Fig. 3) graphs the three main 

cash flows over the life of the project: before tax and 

finance, before tax, and after tax. The cash flow data are 

derived from the CASH FLOW SUMMARY.

Cash Flow Summary

The CASH FLOW SUMMARY is a combined 20-year projection of capital costs, revenues, and annual expenses. The 

bottom-line Cash Flow Summary table shows the cash flows 

before tax and finance, before tax, and after tax. The 

Summary Cash Flow table shows the consolidated cash 

Net profit, 3.5%

Lamination costs

Direct production costs

Fixed costs and overheads

Financing costs

Taxes

Net discounted profit on sales

Laminated lumber plant: 

Discounted costs and profit (loss) 

as a percentage of sales

Note: A net profit represents a rate of return larger 

than the owners' required rate. A net loss represents a 

rate of return smaller than the owners' cost of capital. 

A net profit (loss) of 0% means that the owners are 

earning exactly their cost of capital. 

Figure 2—Sample printout of SUMMARY PIE CHART.

 General Technical Report FPL–GTR–165
5

flows for each revenue and expense category by year. There 

is also a 20-year summary table of wood inputs and product 

outputs.

The main assumptions in this cash flow model are as 

follows:

• All cash flows occur at the end of each year.

• Year 0 represents the start of the project’s operations.

• All cash expenses and all revenues will increase at the 

specified inflation rate.

• Depreciation expense will not increase with inflation.

• As miscellaneous and capital equipment wears out, 

it will be replaced with identical units that have 

increased in cost according to the specified inflation rate.

• If the taxable cash flow is negative in any given year, the 

owners have sufficient income from other sources to take

a tax deduction in that year and will not have to carry the 

tax credit forward (which would reduce the total rate of

return).

Screenshot 6 shows the first 6 years of the Summary Cash 

Flow table from a sample run.

Primary Input Assumptions Worksheets

The primary input assumptions worksheets feed into the 

CASH FLOW SUMMARY and consist of the

General Assumptions, Production Revenues, and Laminations Costs Worksheets.

General Assumptions

General assumptions are common assumptions among 

several worksheets. Some of these assumptions must be 

entered. Others are calculated based on the entered assumptions. Both types of assumptions are shown on the General 

Assumptions worksheet.

Although the general inputs must be individually entered, it 

is also possible to set them as a function of another worksheet. For example, an analyst may wish to do a survey of 

lamination prices, then set the price on this worksheet equal 

to an average quote or to the lowest price obtained.

The General Assumptions worksheet is divided into three 

major sections: entered general assumptions, calculated 

WACC, and system capacity.

Entered general assumptions

The entered general assumptions include interest rates, other 

general assumptions, and income and capital gains taxes.

Interest rates—such as rates charged for borrowing and 

lending and the inflation rate—are used to determine the 

WACC and interest paid on loans.

Other general assumptions include time to start-up, ad valorem (property) taxes, and terminal values. Time to start-up 

Laminated lumber plant: cash flow summary

$(6,000,000)

$(4,000,000)

$(2,000,000)

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

 

Year

Cash flow before tax and finance

Cash flow before tax

After tax cash flow

2006200720082009201020112012201320142015

2016

2017

2018

201920202021202220232024

2025

2026

Annual cash flow ($)

Figure 3—Sample printout of CASH FLOW CHART.

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants
6

affects mainly the land and buildings. Ad valorem (property) taxes apply to the land and buildings, miscellaneous 

equipment, and capital equipment. Terminal values have an 

impact on process equipment and rolling stock. Terminal 

values for land and buildings are entered separately. Terminal values may be either “book” or “current” values. Book 

values follow historic costs and depreciation schedules. 

Current values are based on the economic life of assets and 

change with inflation.

Taxes are divided into Federal and State rates. Social Security is levied only by the Federal government, and workers 

compensation is levied only by States. 

Calculated weighted average cost of capital (WACC)

The weighted average cost of capital (WACC) is the cost of 

financing to the plant. This is the minimum rate of return 

that owners need to achieve on their investment. Financing 

consists of both equity and debt. Complex organizations 

may have several types of equity funding (e.g., common 

stock, preferred stock, etc.) as well as different types of debt 

funding (e.g., short-term debt, secured and unsecured bonds 

of varying terms). Each type of funding may have its own 

cost. In LamLum, all equity funding and all debt funding 

should each be consolidated. The cost of equity funding is 

calculated by adding a risk premium to a “safe” (e.g., bank 

deposit) rate. The cost of debt funding may be represented 

by a bank lending rate. The risk premium is an amount that 

owners would expect to earn over and above this “safe” 

investment rate for a laminated lumber project. The WACC 

may be expressed before and after tax. It may also be 

expressed as nominal (including inflation) and real (without 

inflation). These terms are defined as follows.

Before-tax nominal WACC: Before-tax rate of return, 

including inflation, that owners require on all before-tax 

cash flows. 

Before-tax nominal WACC = (Bank deposit rate + Return

on risk capital) × Equity % + Bank lending rate × Debt %

Before-tax real WACC: Before-tax rate of return, after 

inflation, that owners require on after-tax and finance cash 

flows. 

 Before-tax real WACC = 1+ Before-tax nominal WACC 

 1 + Inflation rate 

After-tax nominal WACC: After-tax rate of return, 

including inflation, that owners require on after-tax cash 

flows. 

After-tax nominal WACC = Before-tax nominal WACC

× (1 − Tax rate)

After-tax real WACC: After-tax rate of return, after 

inflation, that owners require on after-tax cash flows. 

After-tax real WACC = 1 + After-tax nominal WACC

 1 + Inflation rate

Equity/total capital: Percentage of each piece of capital 

equipment that is financed with equity. This ratio increases 

over time as debt is paid off. When new equipment is 

purchased, the ratio decreases again. The ratio is calculated 

using the following formula:

 Equity/Total capital = 1 – 

 

System capacity

The basic unit of capacity is the operating shift. Assumed 

output is stated in terms of production/shift. Labor requirements and capital equipment operation are input on a per 

shift basis. The maximum number of shifts/year will depend 

on the number of days that can be worked by each shift. 

Labor costs will depend on the number of workers required, 

the hours/shift, and the number of operating days/year for 

each shift. The number of shifts required for full-time operation is determined in the Facility Full-Time Operation Shift 

Hours table (Screenshot 7).

Capacity utilization determines how many laminations are 

processed, which depends on shift capacity, the facility 

full-time operation, the percentage of full-time operation 

utilized, and the efficiency of usage. The percentage of 

full-time operation utilized allows for an operation to not 

utilize its full-time capability. This might happen if there is a 

slower start-up process, perhaps as resource supplies dictate 

or as markets are developed. Sample entries for the first 

6 years are shown in Screenshot 8.

Note that in industrial operations, ordinary full-time operation is commonly assumed to be somewhat less than the 

facility’s stated capacity. This allows for additional downtime for maintenance and repairs and does not place unreasonable stress on the equipment.

Production Revenues

The Production Revenues worksheet contains the calculations for plant revenues. The worksheet takes the physical 

outputs from subsequent worksheets and converts these 

outputs into revenues based on the product prices specified 

here.

On this worksheet, the analyst must enter the first year’s 

product prices and choose whether the product prices will 

be automatically adjusted for inflation or manually entered 

each year. If the analyst chooses to automatically adjust for 

inflation, prices are entered just once (Screenshot 9).

Manually entered prices must be entered for each year 

(Screenshot 10). Manually entered prices may be used, for 

example, if it is expected that per-unit product revenues will 

remain constant in nominal dollars or if they will change at 

a rate different than inflation.

Note that this feature can be used in a sensitivity analysis. For example, to see the difference between prices that 

are inflation-adjusted each year and constant prices with 

 General Technical Report FPL–GTR–165

−1

−1

Debt

Total capital

Before-tax real WACC =

After-tax real WACC =
7

inflation-adjusted costs, set all prices equal to those in the 

first year and click the assumption that plant revenues are 

manually entered. Checking the SUMMARY PIE CHART

shows a net loss of 10.5% on each sales dollar. This may 

be compared with the profit of 4.1% with inflation-adjusted 

prices (Figure 2). 

If neither option (adjust for inflation or enter manually) is 

selected or if both are selected, the default is manual entry 

and a warning is displayed.

The Revenue Summary, again shown with “inflation-adjusted revenues” (Screenshot 11), is the primary table calculated 

on the Production Revenues worksheet. In this report, the 

figures from the table that go into the CASH FLOW SUMMARY worksheet are shaded (these figures are highlighted 

in yellow in the program).

Laminations Costs & Conversions Worksheet

Up to 10 different lamination grades may be used on the 

Laminations Costs & Conversions worksheet. Each grade 

may have a different price and ratio of utilizable laminations, merchantable residue, and unmerchantable residue. 

To allow full flexibility, the mix of those lamination grades 

may be changed over time. The Laminations Costs & 

Conversions worksheet is divided into three major sections: 

summary tables, inputs, and other calculated tables.

Summary tables

The Present Values of Laminations Cash Flows table 

(Screenshot 12) contains the summary costing figures, 

expressed in terms of both total costs and unit costs in 

year 0 dollars. Note that costs are expressed as negative 

values and revenues as positive values.

The Summary Laminations Cash Flows table (Screenshot 13) contains the cash flows on which the Present Values 

table (Screenshot 12) is based. The Summary Physical 

Inputs and Outputs contain the wood inputs and outputs of 

the facility (Screenshot 13). Present volumes are calculated 

as well as present values so that break-even costs and revenues may be calculated.

The Laminations Costs by Grade table (Screenshot 14) 

provides more detail than the first summary table, showing 

the unit cost of laminations both for total volume and utilizable laminations. This table shows which lamination grade 

is the most cost-effective. In the example provided, although 

the cost of input laminations for the sub-economy grade is 

only $140/MBF compared with $160/MBF for the economy 

grade, better recoveries on the economy grade mean that 

the net cost of utilizable laminations is $188.06 for the 

economy grade and $280.49 for the sub-economy grade. In 

this example, the plant could save more than $90/MBF on 

utilizable laminations by using the more expensive economy 

grade for input. 

Inputs

As with product prices, laminations input costs may be 

automatically adjusted for inflation or manually entered 

each year. The default is manual entry. In addition to these 

options, input tables include Laminations Input Costs, 

Laminations Input Species and Grade Mix, and Laminations 

Product Recoveries.

The Laminations Input Costs table is the primary input 

area for the costs of individual lamination grades (Screenshot 15). Laminations input costs may be automatically 

adjusted for inflation or manually entered, similar to the 

price data for the Production Revenues worksheet. If costs 

are inflation-adjusted, then only current costs need to be 

entered. If costs are manually entered, then costs for each 

year must be entered individually.

The break-even cost of laminations may be calculated by 

selecting to adjust laminations input costs for inflation and 

setting the present value of the laminations costs in this 

table equal to the “Optional Summary Laminations Input 

Cost” (on the FINANCIAL SUMMARY worksheet). This is 

described in more detail in the notes to the “Optional Summary Laminations Input Cost,” cell A37, on the FINANCIAL 

SUMMARY worksheet.

The program accepts up to 10 different lamination grades. 

Lamination input grades may be divided by whatever is 

logical for the plant. This may be price, if different lamination grades have different prices. Or the input grades may be 

based on lamination quality (for example, species, defects, 

origin, sweep). This would make sense if different lamination input grades produce different outputs.

It is possible that the input mix may change over time. If 

the input percentages in any given year sum to less than 

100%, a warning will appear. If the values sum to greater 

than 100%, an error message will appear. The table for input 

of lamination species and grade mix is shown in Screenshot 16.5

While input mixes may change over time, the product recoveries for each individual grade are fixed. Product recoveries 

must be provided for each input lamination grade (Screenshot 17). Note that if technology were expected to change 

significantly over time so that the proportions of utilizable 

laminations, merchantable residue, and unmerchantable 

residue would change, new input grade categories could be 

created and phased into the input grade mix.

Any percentages not assigned to individual products go by 

default to “Unmerchantable residue.” While input grade 

5Note that no data are to be entered for the first year (2005) 

because of the built-in assumption that the plant is constructed and 

ready for operation at the end of the first year. The second year, 

2006 in the example, is the first full year of the plant’s operations.

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants
8

mixes may change over time, an in-built assumption is that 

the product recoveries for a given laminations input grade 

will not change over time.

Calculated tables

Lamination inputs and utilization by grade are calculated 

and tabulated on the Laminations Costs & Conversion

worksheet. The tables are Total Laminations, Utilizable 

Laminations, Merchantable Unprocessed Residue, and 

Unmerchantable Unprocessed Residue. All these tables are 

similar in appearance. The Total Laminations table is shown 

in Screenshot 18. The present volume is a discounted figure 

used in calculating the average per-unit costs.

The costs of the lamination inputs by lamination grade are 

also calculated and tabulated on the Laminations Costs & 

Conversion worksheet. These tables are Total Laminations 

Input Cost, Merchantable Unprocessed Residue Revenue, 

and Unmerchantable Unprocessed Residue Disposal Cost. 

These tables all have a similar appearance. The Total Laminations Input Cost table is shown in Screenshot 19.

Costing Worksheets

Ten costing worksheets cost out various parts of the laminations operation. They consist of a Consolidated Operating 

Costs worksheet and nine subsidiary worksheets. These 

costing worksheets draw on common inputs from the 

General Assumptions worksheet. Individual cost items are 

entered on the subsidiary worksheets. Outputs from the 

Consolidated Operating Costs worksheet are exported to the 

CASHFLOW SUMMARY worksheet.

Consolidated Operating Costs 

The Consolidated Operating Costs worksheet summarizes 

the plant’s operating costs. It consolidates information 

from the nine individual subsidiary costing worksheets, 

which provide detailed costs for various components of the 

laminated lumber operation. The Consolidated Operating 

Costs worksheet contains all costs apart from the costs of 

the laminations, which appear on the Laminations Costs & 

Conversions worksheet. The Consolidated Operating Costs

worksheet includes capital costs, direct operating costs, financing, adjustments, and working capital. No assumptions 

are entered on this worksheet.

The present value of operating costs is calculated on the 

Consolidated Operating Costs worksheet. The present value 

of the operating costs is the amount that must be recovered, 

over and above laminations costs, over the project’s life.6

These summaries are shown in Screenshot 20.

The nine subsidiary costing worksheets that feed information into the Consolidated Operating Costs worksheet are as 

follows:

1. Process equipment and outputs

2. Land & buildings

3. Miscellaneous equipment

4. Rolling stock

5. Wages

6. Administration

7. Worker accessories

8. Other costs

9. Working capital

Consolidated operating costs also contain a Net Asset Value 

Summary table, which summarizes the net book value of 

the various asset classes, subtracting the balance of any 

outstanding loans to determine net asset values. This table 

is for management information purposes only. The numbers resulting from the calculations are not used on other 

worksheets.

Process Equipment

The Process Equipment worksheet accounts for costs 

involved with the main operating equipment of a lamination 

plant, such as trimming saws and presses. The purchase and 

operating costs for the equipment are entered on this worksheet. Plant output over time is also entered, in terms of the 

amount of plant throughput (MBF of utilizable laminations/

hour) allocated to various products. Note that these percentages may change over time. Note also that any process plant 

output that is not allocated to merchantable products is automatically allocated to unmerchantable processed residue. 

Once the input data are entered, the annual physical inputs 

and outputs are calculated as well as the process equipment 

costs.

Land & Buildings

Land costs include both land and depreciable land improvements. However, land itself cannot be depreciated for tax 

purposes. Buildings do not include miscellaneous equipment, which is accounted for on another worksheet.

LamLum allows the user to select whether land and buildings are purchased or leased. If leased, then the lease cost 

is deductible in the year it occurs and there is no allowable 

depreciation. If purchased, then the interest component of 

any financing is deductible in addition to depreciation on the 

buildings and depreciable land improvements. The program 

automatically takes care of these aspects of purchase and 

lease.

A difference between miscellaneous equipment and real 

estate is that whereas miscellaneous equipment usually 

6The break-even cost of laminations is determined by dividing the

after-tax net present value of operating costs by the present value 

of laminations input volume. This is done on the FINANCIAL 

SUMMARY worksheet.

 General Technical Report FPL–GTR–165
9

declines in value over time, real estate usually holds its 

value and may increase in value. In terms of cash flow, this 

only matters at the end of the project when the terminal 

values of assets are incorporated into the cash flow, if the 

assets have been purchased. Terminal values are important 

to consider in the calculation of NPVs and IRRs. Terminal 

values of land and buildings must be accounted for using 

either “book” or “current” values. The book value is the 

historic cost, less the IRS-allowed depreciation.7 The current 

value is the historic cost, plus inflation, less real depreciation. Real depreciation (for buildings only) is approximated 

in this program by using a straight-line rate based on the 

current estimated value of the asset and its economic life.

The Miscellaneous Equipment worksheet calculates cash 

flows for building contents and other miscellaneous equipment (if any). This worksheet is constructed so that as assets 

reach the end of their economic life, they are automatically replaced at their original cost, plus inflation. Terminal 

values are based on asset book values. Some inputs for 

the Miscellaneous Equipment worksheet come from the 

General Assumptions worksheet; others are provided on the 

worksheet.

Rolling Stock

The Rolling Stock worksheet calculates a 20-year cash flow 

statement for capital and operating costs associated with up 

to eight different types of rolling stock (forklifts, loaders, 

utility vehicles, etc.). The worksheet is similar to Miscellaneous Equipment in many ways, but it allows for such 

products as fuel, oil, and lubrication, which depend in part 

on how many hours/shift the equipment is operating.

The calculations depend on inputs. Some inputs are imported from the General Assumptions worksheet. Others 

that apply to only these costs are entered on this worksheet 

under “General entered assumptions” and “Entered assumptions by rolling stock type.”

Wages

The Wages worksheet calculates the costs for hourly wage 

workers, using inputs from the General Assumptions

worksheet, as well as some inputs that are entered on the 

Wages worksheet. Note: In calculating the wages expense, 

salaried employees should not be included as part of the 

crew. Salaried employees are included in the Administration 

worksheet.

The Wages worksheet is divided into three major sections: 

Summary tables, Assumptions, and Calculations. In the 

Summary tables, wages are broken down in two ways, by 

worker type and wage type (Screenshot 21). Total employment costs should be identical, regardless of whether they 

are calculated by worker or wage. These summary tables 

enable the analyst to see what types of wages costs have the 

greatest impact on total costs. 

The Assumptions portion of the Wages worksheet is divided 

into five sections:

1. Employees required

2. Employees hired

3. Standard and available work hours

4. Base hourly wage rates plus allowances by worker type

5. Individual worker accessories

“Employees required” is the number of employees required per shift by employee type for each operating shift. 

It is possible to specify a different mix of employees for 

each shift. The Employees Required table is shown in 

Screenshot 22.

LamLum has built-in calculations to ensure that there 

are sufficient employees to perform the work required. 

Employees may work “standard hours” or overtime hours 

up to a user-specified maximum.

“Employees hired” is the number of employees actually 

hired by employee type for each year. The “over-worked” 

warning indicates that for at least one year and one 

employee type, not enough hours are available, even with 

overtime, to meet the shift requirements. To correct this, 

either the number of workers required needs to be reduced 

or the number of available hours needs to be increased in the 

Standard and Available Overtime Hours/Worker input table 

(in the Assumptions section below the Employees Required 

table on the Wages worksheet), or the number of employees 

hired in at least one year needs to be increased. For 

example, reducing the number of wood-handling workers 

from three to two in year 1 produces a deficit hours warning 

to allow more overtime (Screenshot 23).

To see in which year or years a deficit occurs, scroll 

down the worksheet to the wood handling workers in 

the Wages and Hours Calculation by Worker Type tables 

(Screenshot 24). These are individual tables that calculate 

the total employment cost and hours worked for each type 

of worker. For each worker type, if the number of hours 

required exceeds the standard hours available, overtime 

hours will be automatically charged. If more overtime hours 

are required than are available for the expected number of 

workers, then the total remaining available hours will be 

negative and a warning will appear. (Deficit hours are set in 

red type and highlighted in the program.) 

In the example shown in Screenshot 24 for wood-handling 

workers, there is a deficit of 924 remaining available hours 

for the year 2005. If the number of wood-handling workers 

7The Internal Revenue Service (IRS) does not allow depreciation

on land, only on certain land improvements. For further information, see IRS Pub. 946, “How to Depreciate Property,” at www.irs.

gov/publications/p946/index.html

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants
10

hired in 2005 is changed back from two to three (see 

Screenshot 23), the deficit warning is eliminated. 

Alternatively, the available work hours can be increased to 

allow more overtime. The Standard Work Hours per Worker 

and Available Overtime Hours per Worker tables show 

the number of hours/year for which a worker will be paid 

ordinary hourly rates and the number of available hours for 

overtime work each year (Screenshot 25). Standard hours 

worked incorporates holidays and weekends as well as 

vacation days and allowable sick days. “Standard hours/

shift” is imported from the General Assumptions worksheet. 

Implicit in the calculations is the assumption that if a worker 

is required to work more hours than the equivalent of one 

shift, then the work will be considered overtime. Available 

overtime hours/worker is the number of hours/year available 

for overtime. The standard shift hours plus the available 

overtime hours is the maximum number of available work 

hours. If any worker type exceeds this total, then a warning will appear in the Employees Required and Employees 

Hired tables (Screenshots 22 and 23, respectively).

Hourly wages and workers’ fixed costs are calculated in the 

Base Hourly Wage Rates Plus Allowances table (Screenshot 26). Adjustments for vacation pay, statutory holiday 

pay, sick leave, and other allowances are added as percentages of the unadjusted hourly wage rates. Annual fixed costs 

are added to the unadjusted rates as dollar amounts and 

include health insurance, liability insurance, labor accessories (from the next table), and other fixed costs. Retirement 

is calculated as a percentage of yearly wages.

Accessories used by individual workers are entered and 

tabulated in the Individual Worker Accessories and Costs 

table (Screenshot 27). Examples of accessories are ear muffs 

(hearing protection), gloves, hard hats, high-visibility vests, 

and safety boots These are annual costs that are totalled in 

the base Hourly Wage Rates Plus Allowances table (Screenshot 26).

The calculations portion of the Wages worksheet is divided 

into “shift hours required” and “ages and hours calculations 

by worker type.” “Shift hours required” (Screenshot 28) 

computes the hours required by each employee type, depending on the number of operating shifts each year and the 

number of employees/shift required in each worker group. 

The program will allocate as many shifts as possible to first 

shift before moving to subsequent shifts. 

Crew Accessories

The Crew Accessories worksheet (Screenshot 29) calculates 

the costs for gear used by the entire crew, rather than by 

individual workers. This gear includes safety equipment as 

well as loose tools. Implicit in the model is the assumption 

that the total cost of crew accessories will be required when 

the plant is first operational. Afterwards, an annual cost 

equal to the total cost divided by the expected life will be 

incurred.

Crew accessories are really part of miscellaneous equipment. That is, they should be capitalized and depreciated. 

However, the total cost of these tools is usually so small 

compared with the total job cost, that more accurate accounting for these capital costs should not significantly 

change the overall costs.

Administration

The Administration worksheet calculates the costs for 

administration expenses and salaried employees’ earnings 

(Screenshot 30). Administration expenses include fixed 

yearly salaries, clerical expenses, other professional fees, 

yearly communication expenses, and other overheads. 

Inputs for the Administration worksheet are similar to those 

for Wages. In addition, there are fixed costs for communications, payroll, legal fees, and accounting.

Other Costs

The Other Costs worksheet is a template into which annual 

costs that are not otherwise included in the analysis may 

be incorporated. An example might be the cost for catering 

at a meeting or demonstration at the plant. These costs are 

entered on the basis of cost/day, along with the number of 

days/year for which the costs will be required.

Working Capital

Working capital is the funding needed to finance a firm’s 

short-term assets; for example, cash on hand, accounts 

receivable, and inventory. Working capital is generally used 

to pay short-term liabilities, such as accounts payable, bank 

overdraft, and current portion of long-term debt.

The Working Capital worksheet calculates the amount of 

working capital required by year. In an accounting sense, 

working capital is defined as current assets minus current 

liabilities. Current assets represent short-term funds that are 

needed; cash on hand, accounts receivable, and inventory 

are usually the three largest components. The most common 

method of funding current assets is with current liabilities. 

Accounts payable and bank overdraft are the two most common forms.

Working capital could be calculated by making estimates 

of all current assets and subtracting estimates for all current 

liabilities from those estimates. The difficulty with this 

calculation is the circular relationship between laminations 

prices and inventory value, because inventory value is in 

part a function of the cost of the laminations in inventory. 

This makes the calculation of a break-even laminations 

price a circular one since working capital is a cost that must 

be recovered.

To overcome these difficulties, working capital is estimated 

in this model as a fixed percentage of estimated sales for the 

upcoming year. In addition, the specified debt-to-total capital ratio (from the Financial Summary worksheet) is used to 

estimate changes in short-term debt resulting from changes 

in working capital.

 General Technical Report FPL–GTR–165
11

Built into the model is the assumption that invested working capital is recovered at the end of the 20-year planning 

period. Sample working capital calculations are shown in 

Screenshot 31.

If a contingency allowance on working capital was specified 

on the Financial Summary worksheet, it is incorporated in 

the Consolidated Operating Costs worksheet.

LamLum Assumptions

Incorporated into any model are critical assumptions that 

have a significant impact on the results. If those assumptions 

are reasonable, then the results of the model may be used as 

a reasonable guide. If those assumptions are not reasonable, 

then the model is worthless.

Like all models, LamLum has some in-built assumptions.

• The plant can obtain all the laminations it needs 

at the prices specified. In the model, prices and the 

laminations mix may change over time. However, 

implicit in the calculations is that the plant can obtain 

sufficient laminations to operate at capacity. If laminations will be limited, then plant capacity should 

 be reduced within the model.

• Unless otherwise specified, inflation affects all variables 

equally (except for depreciation). Furthermore, all costs 

and revenues will increase annually at exactly the rate 

of inflation. If it is believed that some costs are 

increasing faster than others, they may be individually 

adjusted.

• Except for working capital (see below), all cash flows 

occur at the end of each year. This is a basic simplifying 

assumption that is common to most discounted cash flow 

analysis. In reality, cash flows occur throughout the year. 

However, the accuracy gained by trying to account for 

this is lost in all the other assumptions that must be made 

(for example, inflation rate, interest rates, salvage value, 

and repair and maintenance costs).

• Since working capital represents liquidity that must be 

available during the course of the year to finance 

operations, implicit in the model is the assumption that 

the annual working capital is required at the beginning 

of each year and that it is paid back at the end of the 

project planning horizon.

• The bank annual lending rate is used for all short- and 

medium-term borrowing. It does not apply to borrowing 

for land and buildings. A mortgage rate, which applies 

only to land and buildings, is entered separately.

• The bank annual lending rate is not affected by the 

amount of debt in the financial structure of the firm. 

While in reality, a bank or finance company would want 

a higher rate of return if financial gearing exceeds some 

amount, financing is commonly available for up to about 

70% of the purchase price of a piece of capital equipment. Within reasonable gearing ranges, the loan interest 

rate should be approximately constant.

• Actual annual interest payments are probably less than 

those calculated in the model. They will decrease as the 

frequency of loan repayments increases because less loan 

principal is outstanding. Given the magnitude and length 

of the project, any discrepancies caused by this approximation will not be significant.

• Any tax losses are deductible in the year in which they 

occur. Implicit in this assumption is a further assumption 

that there is income from some other source against 

which tax losses may be deducted. As a result, losses are 

not carried forward for tax purposes. If losses do have to

be carried forward until there are sufficient profits to 

offset them, this would lower the owners’ rate of return.

• Technology is not a factor.

• The percentage of utilizable laminations, merchantable

residue, and unmerchantable residue from any given 

grade will not change over time. If changing technology were a factor (for example, if anticipated improved 

recoveries were anticipated as a result of better technology in some future year), it would be possible to work 

around this assumption on the Laminations Costs & 

Conversions worksheet. To do this, an additional grade 

(for example, Economy grade II) could be incorporated 

with different conversions and be brought into the wood 

input mix in some later year.

• The inputs required by product on the Process Equipment and Outputs worksheet do not change over time. 

Although this does not allow for increasing efficiencies, 

a similar work-around is available to the problem of utilizable laminations described in the previous text. That is, 

if inputs changed significantly as a result of changing 

technology or improved efficiencies, then it would be 

possible to enter a new product (for example, Std. Lam

header II) with a new set of inputs and incorporate the 

new product in the year in which these efficiencies are 

expected to begin.

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants
12

 General Technical Report FPL–GTR–165

Appendix—Laminated Lumber Plant

User-Defined Inputs by Worksheet

Financial Summary Worksheet

The FINANCIAL SUMMARY worksheet contains all the 

“bottom line” information: net present values (NPVs), internal rates of return (IRRs), break-even lamination costs, and 

20-year cash flows. In addition, it contains variable inputs to 

allow users to conduct a sensitivity analysis.

Plant name: Name of the plant.

Year: Operating year for costing. The year entered here is 

also referred to as year 0. Year 0 is right now, today. Year 1 

is exactly 1 year from today. Year 2 is exactly 2 years from 

today, etc.

Other identifying run codes: Any other names or letters 

associated with the run to identify it.

IRR seed: Number that the program uses to begin its IRR 

calculations. A good place to start is 10%. If the cash flows 

on the CASH FLOW SUMMARY worksheet change signs 

more than once, then there may be multiple IRRs. In that 

case, experimentation with different IRR seeds may reveal 

an additional IRR.

Sensitivity analysis scaling factors: Percentages that may 

be varied up or down from 100% to test the sensitivity of 

the NPVs, rates of return, and break-even lamination costs 

to changes in various costs and revenues. Sensitivity analysis scaling factors may also be used in conjunction with the 

Excel “Goal Seek” algorithm to determine what percentage 

cost or revenue categories would need to change for the 

operation to just break even.8

Cost contingency allowances: Percentages that may be 

varied up or down from zero to allow for a cushion from 

the point estimates for various costs. While the cost contingency allowances work in a similar fashion to the sensitivity 

analysis scaling factors, they may be adjusted independently 

of the sensitivity analysis to allow for greater uncertainty 

regarding various costs.

Optional summary laminations input cost: Cost that may 

be used to calculate the true break-even laminations cost. 

Alternatively, this cost may be used to quickly change 

all the lamination costs to see the impact on the financial 

indicators from changing laminations input costs. To use 

this cost, set the laminations costs on the Lamination Costs 

& Conversions worksheet equal to this cell. To find the true 

break-even laminations cost, set the laminations costs equal 

to this cell. Use the “Goal Seek” tool to set the “After-tax 

net profit (loss)” to $0 by changing the “Optional summary 

laminations input cost.”

Make sure that the “Optional summary laminations input 

cost” is an absolute number and not a reference to another 

cell. Otherwise, you will not be able to calculate a breakeven laminations cost using the “Goal Seek” function.

Pre-tax required return premium on risk capital: Nominal percentage (including inflation) that is appropriate for a 

plant in this industry and that is over and above the “safe” 

bank investment rate. It represents the risk that the owners 

bear by having funds invested in the forest products industry 

rather than in the bank. This percentage is added to the bank 

deposit rate and weighted (using the debt/total capital ratio) 

with the bank lending rate to give the nominal before-tax 

weighted average cost of capital.

Debt/total capital: Target debt ratio. The debt/total capital 

ratio is the percentage of assets and working capital that is 

financed with debt. There is a built-in assumption that this 

ratio decreases over time as debt is paid off. When new 

assets are purchased, the ratio increases again. There is also 

a built-in assumption that all outstanding debt will be paid 

at the end of the planning period. This number is important 

to determine debt, loan payments, and total equity capital. 

In turn, if the cost of debt differs from the cost of equity, 

the level of debt will have an impact on the WACC. This 

ratio affects the loans on land and buildings, miscellaneous 

equipment, capital equipment, and working capital. It also 

affects the before-tax nominal WACC, as the WACC is a 

mix of the cost of debt and the cost of equity.

Cash Flow Summary Worksheet

There are no inputs on the CASH FLOW SUMMARY 

worksheet.

General Assumptions Worksheet

The General Assumptions worksheet contains most of the 

general assumptions—assumptions that are used as inputs 

on more than one worksheet. Entering these assumptions 

here will change them automatically throughout the model. 

Most inputs are “Entered general assumptions;” some are 

“Calculated general assumptions.”

8To do this, select the cell containing the value to break even

(for example, after-tax NPV on the FINANCIAL SUMMARY

worksheet). Then, go into “Goal Seek” on the “Tools” menu. Set 

the break-even value to $0 by allowing the cell containing the 

desired sensitivity percentage to vary. For example, in the sample 

provided, sales revenues would have to decline to 92% before the 

after-tax NPV declines to $0 and the owners would earn exactly 

their required rate of return on invested capital.
13

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

Entered General Assumptions 

Interest Rates

Annual bank deposit rate: Equivalent annual interest rate9 

received for savings at the bank. It is a nominal rate; that is, 

it includes inflation. The bank deposit rate is used in determining the owners’ before-tax nominal WACC.

Annual bank lending rate: Basic commercial credit rate 

open to owners. The annual bank lending rate is an equivalent annual nominal rate. An average rate should be used 

here, reflecting both the short-term financing required for 

day-to-day operations and working capital and the longerterm financing required for capital equipment loans. The 

bank lending rate is used in the costs for miscellaneous 

equipment, capital equipment, and working capital. It is 

also used as the cost-of-debt component in determining the 

before-tax nominal WACC. A separate mortgage rate is used 

for land and buildings.

Bank financing charge: Percentage of loan amount paid 

up front, at the start of the loan. The bank financing charge 

is used at the origination of all loans (mortgages, miscellaneous equipment, capital equipment, and working capital).

Inflation rate: Forecast average annual rate of inflation 

for costs and revenues in the forest products industry. An 

appropriate inflation rate should be based on forecasts for 

the industry, rather than on general consumer products inflation. The inflation rate is important because it affects the 

real WACC. It also has an impact on real depreciation rates 

and capital equipment charge-out rates using the break-even 

capital costing method. Built into the model is the assumption that all cash costs and all revenues will increase at the 

specified inflation rate. Since bank interest rates generally incorporate inflation expectations, if the inflation rate 

is changed in a sensitivity analysis the bank interest rate 

should probably be changed as well.

Time to construct and start up (months): Time required 

to construct the laminations plant and make it operational. 

All start-up costs are compounded forward to the start-up 

date (year 0).

Ad valorem (property tax) mill rate ($/$1000): Tax rate 

that applies to real property, miscellaneous equipment, and 

capital equipment. Ad valorem taxes are expressed as a mill 

rate, that is, $/$1000. For example, a mill rate of 32 represents an annual tax of $32 for every $1,000 of net asset 

value. Ad valorem taxes are levied on the current value of 

land and buildings and on the book value of miscellaneous 

equipment and capital equipment.

Electricity demand charges ($): Costs per kilowatt for 

electricity. These are fixed charges.

Electricity price ($/kWh): Price for electricity 

consumption.

Conversion from MBF (1,000 board feet) to tons: 

Conversion for softwood lumber is 1,000 board feet 

= 0.974 short tons. For hardwood lumber, 1,000 board feet 

= 1.680 short tons.10

Income and Capital Gains Taxes

Income taxes: Include State and Federal income taxes. 

State and Federal rates are additive. These numbers are 

important to determine the after-tax rate of return on cash 

flows. Income taxes apply to all earned income and to 

excess depreciation. That is, if an asset is sold for more than 

its book value but less than its historic cost, the difference is 

charged as ordinary income.

Capital gains taxes: Capital gains taxes apply to increases 

in asset values over and above their historic costs.

Calculated Weighted Average Cost of Capital 

(WACC)

Before-tax nominal WACC: Weighted average of (Bank 

deposit rate + Allowable return on risk capital) × 

Owners’ equity percentage + Bank lending rate × 

Owner’s debt percentage

Before-tax real WACC: 1 + Before-tax nominal WACC

 1 + Inflation rate

After-tax nominal WACC:

Before-tax nominal WACC × 

 [1 − (Federal income tax rate + State income tax rate)]

After-tax real WACC: 1 + After-tax nominal WACC

 1 + Inflation rate

Equity/Total capital: 1 − Target debt ratio

System Capacity

Total Shift Capacity

Costings based on amount of wood processed per standard 

operating shift.

Facility Full-Time Operation Shift Hours 

Operating days/year: Number days/year that each shift 

will be operating when the yard is operating full-time. 

Note: While these values provide the inputs for the full-time 

operating capacity, the amount of capacity utilized is entered 

separately for each year. Operating days/year is used in the 

calculation of shift hours/year. These figures are ultimately 

9Rate that would be charged if payments were received or due only

once, at the end of each year.

10Howard, J.L. 2003. U.S. timber production, trade, consumption,

and price statistics, 1965–2001. Research Paper FPL-RP-615. 

Madison, WI: U.S. Department of Agriculture, Forest Service, 

Forest Products Laboratory. 

− 1

− 1

Before-tax real WACC:

After-tax real WACC:
14

 General Technical Report FPL–GTR–165

used in calculations of wages, equipment costings, and 

production calculations.

Standard hours/shift: Number of hours that each shift will 

operate. This number is used to calculate the shift hours per 

year. Standard hours/shift is used in the calculation of shift 

hours/year. These figures are ultimately used in wages calculations, equipment costings, and production calculations.

Capacity Utilization 

Percentage of full-time operation utilized: Percentages by 

year of what has been defined as the full-time operation of 

the facility. The numbers are used to calculate the number of 

shifts/year. They could be used to show that only one shift/

year is operating at first, but that two, three, or more shifts 

are operating in later years.

Percentage of total operating capacity utilized: Percentages of the system full-time capacity operating capacity 

defined previously. These percentages are used to calculate 

the number of pieces and volume processed. They may be 

used to represent decreased efficiencies when the facility is 

new (that is, workers will be less efficient when they begin 

and more efficient as they gain more experience with the 

equipment and with working together).

Revenues & Outputs Worksheet

The Revenues & Outputs worksheet calculates the revenues 

and physical outputs produced by the plant. This worksheet 

combines the inputs provided in subsequent worksheets with 

the product prices entered here. The only inputs required on 

this worksheet are year 0 product output prices, prices that 

are identified by product output name. The prices are related 

to the start-up date of the plant.

Lamination Costs & Conversions 

Worksheet

The costs of the laminations and the associated products into 

which they may be manufactured are entered on the Laminations Costs & Conversions worksheet. 

Wood input costs and recoveries: Basic inputs to the plant 

in the form of dimension lumber. Because trimmings and 

rejects may be included, merchantable and unmerchantable 

residue appear. The input lamination grade names, costs, 

and associated products are set here.

The wood input costs and recoveries may be set equal to the 

“Optional summary laminations input cost” on the FINANCIAL SUMMARY worksheet. This will reveal the impact of 

changes in the laminations costs on NPVs and IRRs on the 

FINANCIAL SUMMARY by changing the “Optional summary laminations input cost” on that sheet. The “Goal Seek” 

function can be used to determine the maximum laminations 

input price required to break even. (See note on the FINANCIAL SUMMARY worksheet for more information.)

Wood input mix: Percentage mix over time of different 

grades of laminations. This mix may be constant or it may 

be varied if qualities or grades are expected to change over 

time.

Consolidated Operating Costs 

Worksheet

There are no user-defined inputs on the Consolidated 

Operating Costs worksheet. This worksheet consolidates 

the operating costs from all the subsidiary worksheets.

Process Equipment & Outputs 

Worksheet

The Process Equipment & Outputs worksheet provides the 

costing information for the process equipment that goes 

into the plant. It also provides output calculations, since the 

output will depend in large part on the process equipment. 

The user-defined inputs on this worksheet are broken down 

into various input tables.

Process equipment purchase costs: Basic costs to purchase equipment in the laminations plant and get it up and 

running. These costs are all capitalized and depreciated.

Operating costs (full time): Costs to operate the plant on 

a full-time basis. If the plant is operated less than full-time, 

these costs are pro-rated.

Plant input/output relationships: Input/output relationships in terms of throughput and electricity.

Process equipment recovery periods and depreciation 

method: Depreciable life of the process equipment. It 

should be expressed in terms of years using Internal Revenue Service (IRS) guidelines. The Modified Accelerated 

Cost Recovery System (MACRS), which has been used for 

most business assets placed in service after 1986, consists of 

two depreciation systems: the General Depreciation System 

(GDS) and Alternative Depreciation System (ADS). Some 

assets may be depreciated using either the GDS or the ADS. 

The two systems allow different depreciable lives and different methods.11

The depreciable life, combined with the depreciation 

method chosen, will determine the depreciation expense 

taken each year. The economic life in years should also be 

specified for the process equipment. The economic life is 

the effective operating life of the equipment, after which the 

equipment will be automatically replaced. Any gain or loss 

on salvage will be automatically calculated.

11For detailed information, see IRS Pub. 946, “How to Depreciate

Property,” at www.irs.gov/publications/p946/index.html
15

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

The salvage value of the process equipment should be in 

year 0 dollars. It will be adjusted automatically for inflation.

The entered depreciation code will determine the depreciation method used for tax purposes. The codes are as follows:

DB Declining balance (GDS)

SLA Straight-line accelerated (GDS)

SLADS Straight-line (ADS) 

SLEL Straight-line (economic life)

K “K”ustom

Note that the last two depreciation methods, SLEL and K, 

may not be allowed by the IRS for tax purposes. Both of 

these methods may be used for management purposes. 

K may also be used in place of the other methods if allowable depreciation write-offs are modified.

Process plant output: Products produced and percentage of 

total output going into each product over time.

Additional inputs required by product: Additional inputs 

(glue, hardware, etc.) required by each output product of the 

plant.

Land & Buildings Worksheet

The Land & Buildings worksheet provides the costing 

information for the real estate portion of the project. The 

user-defined inputs on this worksheet are broken down into 

various input tables.

General Assumptions 

Some general assumptions are imported. Those that the user 

must provide on this worksheet are as follows:

Mortgage term (years): Number of years to use in the 

calculation of the mortgage payment. 

Annual bank mortgage rate: Interest rate charged by the 

bank on mortgages for land and buildings.

Land 

Initial bare land purchase price ($/acre): Cost of land, 

including non-deductible improvements. Such improvements include public utility initial clearing and grading land 

improvements as specified in Rev. Rul. 72-403, 1972-2 C.B. 

102 (IRS. 2000. How to depreciate property. Pub. 946. 

p. 90, Table B-1.)

Land area required (acres): Land area required for laminated lumber plant.

Real annual increase (decrease) in land value (%): Input 

that allows for increases or decreases in land prices that are 

faster than inflation. The real increase (decrease) is in addition to inflation. If land changes in value at the same rate as 

does inflation, then this value should be zero.

Annual land lease cost ($/acre): This figure is not needed 

if the land is purchased.

Annual R&M expense (% current capital value):

Expense for repairs and maintenance on land (ploughing, 

fire protection, etc.).

Annual insurance expense (% current capital value):

Expense for property insurance on land.

Buildings

Initial building purchase/construction cost ($): Cost to 

purchase or construct the building.

Real annual increase (decrease) in building value (%):

Input that allows for increases or decreases in building values that are faster than inflation. The real increase (decrease) 

is in addition to inflation. If buildings change in value at the 

same rate as does inflation, then this value should be zero.

Annual building lease cost ($): This figure is not needed if 

the building is purchased.

Annual R&M expense (% current capital value):

Expense for repairs and maintenance on buildings.

Annual insurance expense (% current capital value):

Expense for property insurance on buildings.

Payment method: Land and buildings may be either purchased or leased. Select method by a check (√) or an “x.”

Depreciable land improvements: Depreciable land improvements include roading, fences, water system, and other 

improvements. The IRS allows depreciation expense using 

either straight-line or declining-balance depreciation on depreciable land improvements. If declining-balance depreciation is used, then the maximum allowable declining-balance 

factor is 150%.

Buildings: IRS allows only straight-line depreciation over 

either 39 or 50 years to be used for buildings.

Miscellaneous Equipment 

Worksheet

Miscellaneous equipment includes all the long-term assets 

that go into a project that are not real estate or process 

equipment. These assets might include computers and 

peripheral equipment, office machinery, office furniture 

and fixtures, etc. The inputs required on the Miscellaneous 

Equipment worksheet are as follows:

Insurance (% replacement cost): Insurance for miscellaneous equipment.

No. required: Number of machines of each type that are 

needed.

Cost/unit: Year 0 cost for miscellaneous equipment.
16

 General Technical Report FPL–GTR–165

Annual R&M percentage of straight-line depreciation:

Repairs and maintenance as a percentage of straight-line 

depreciation taken over the economic life of the asset.

GDS life (years): Life of miscellaneous equipment using 

the GDS. GDS values come from IRS tables. For example, 

see IRS. 2000. How to depreciate property. Pub. 946.

ADS life (years): Life of miscellaneous equipment using 

the ADS. ADS values come from IRS tables. For example, 

see IRS Pub. 946.

Economic life (years): Actual estimated useful life of miscellaneous equipment. The economic life may be greater or 

less than the depreciable life allowed by the IRS. The asset 

will be automatically replaced at the end of its economic 

life. The replacement price will be the original cost plus an 

inflation adjustment.

Salvage estimate: Estimated value, in year 0 dollars, at the 

end of the economic life. The salvage estimate is used for 

current value calculations, which are automatically increased for inflation.

Depreciation method: Code for depreciation method used. 

The methods and codes are the same as those used for 

buildings. Note that the depreciation codes under individual 

equipment items may be entered separately. However, they 

are presented in boldfaced type because they are linked to 

the depreciation method input in the general entered assumptions. The depreciation method used will usually be 

the same for all types of miscellaneous equipment. For tax 

purposes, miscellaneous equipment may be depreciated 

using either straight-line or declining-balance depreciation. 

The depreciation codes follow:

DB Declining-balance (will automatically switch to 

straight-line depreciation if the latter offers 

higher write-off)

SLA Straight-line (MACRS life, accelerated)

SLADS Straight-line (ADS)

SLEL Straight-line (economic life)12

K “K”ustom13

Declining-balance factor: Percentage used in decliningbalance depreciation. A maximum of 200% is currently 

allowed with miscellaneous equipment. Using a decliningbalance factor of 200% allows a faster write-off and greater 

tax savings, provided that there is sufficient offsetting 

revenue. The IRS also allows a factor of 150%.

Rolling Stock Worksheet

Rolling stock is the additional machinery and equipment 

(forklifts, trucks, etc.) used in the laminated lumber plant. 

Some assumptions on the Other Equipment worksheet are 

imported. Others are entered. The entered assumptions are 

divided between general entered assumptions, that is, assumptions that apply to all pieces of other equipment, and 

assumptions that apply to individual equipment types. 

General Entered Assumptions 

Depreciation method: Code for depreciation method used. 

The methods and codes are the same as for miscellaneous 

equipment. (See section on Miscellaneous Equipment Worksheet.) Note that the depreciation codes under the individual 

pieces of capital equipment may be entered separately. 

However, they are presented in boldfaced type because they 

are linked to the depreciation method input in the General 

Entered Assumptions. The depreciation method used will 

usually be the same for all pieces of capital equipment. For 

tax purposes, capital equipment may be depreciated using 

either straight-line or declining-balance depreciation. 

Rolling stock insurance (% purchase): Cost to insure 

equipment.

Diesel fuel cost ($/gallon): Cost for diesel fuel (not including road-use taxes).

Oil cost ($/gallon): Cost for oil.

Terminal values: Valuation method for assets at end of 20-

year planning period. Terminal values may be either current 

or book. Current values use asset economic life and consider 

inflation. Book values are based on the asset historic costs 

and selected depreciation method.

Entered Assumptions

There are a number of entered assumptions by capital 

equipment type. These assumptions may be either entered 

individually on this worksheet, or they may be copied and 

pasted from the Capital Equipment Library worksheet at 

the end of the workbook. The entered assumptions are as 

follows:

System description name: Identification of the combination of equipment used.

Expected average productivity (pieces/shift or MBF/

shift): Base input processing productivity expected from 

given combination of capital equipment.

Other equipment name: Name of equipment used.

Initial cost: Year 0 cost of equipment. Note that the replacement cost of the equipment will be increased for inflation.

GDS life (years): Depreciable life of equipment under 

GDS. (See IRS Pub. 946.)

12Straight-line depreciation over an asset’s economic life is not an

IRS-approved method.

13IRS would only approve “K”ustom depreciation if it followed an

IRS-approved method.
17

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

ADS life (years): Depreciable life of equipment under ADS. 

(See IRS Pub. 946.)

Economic life (hours): Practical operating life of equipment in hours. The expected operating life is used in 

calculating repair and maintenance costs. The economic life 

in hours divided by the economic life in years provides an 

economic constant hours/year. If equipment use exceeds this 

rate, then repairs and maintenance will be increased.

Economic life (years): Practical operating life of equipment 

in years. The expected operating life is used in calculating 

repairs and maintenance costs. It is also used to determine 

the year or years in which the equipment will be replaced.

Salvage estimate: Used for current value calculations and 

to determine capital gains or losses when the equipment is 

sold. The salvage estimate is the estimated value, in 

year 0 dollars, at the end of the economic life of the equipment. These values are automatically increased for inflation.

Fuel consumption (gal/h): Rate of fuel consumption. The 

rate of fuel consumption, combined with cost of fuel and 

operating hours, provides the total fuel cost.

Oil & lube (% fuel): Oil and lube cost as a percentage of 

total fuel cost.

Other annual costs ($/year): Any other annual costs.

Avg. annual R&M (%): Average annual repairs and maintenance (R&M) as an estimated percentage of economic life 

depreciation. Repairs and maintenance will be increased if 

the equipment is used for more hours than its average annual 

economic rate (economic life (hours) divided by economic 

life (years)). R&M will be decreased if the equipment is 

used for fewer hours than its average annual economic rate.

Depreciation method: Code for depreciation method used. 

The methods and codes are the same as those for Rolling 

Stock. Note that the depreciation codes under the individual 

pieces of capital equipment may be entered separately. 

However, they are presented in boldfaced type because they 

are linked to the depreciation method input in the General 

Entered Assumptions. The depreciation method used will 

usually be the same for all pieces of capital equipment. For 

tax purposes, capital equipment may be depreciated using 

either straight-line or declining-balance depreciation. 

Declining-balance factor: Percentage used in decliningbalance depreciation. With other equipment, a maximum of 

200% is currently allowed. This is known as “double declining-balance depreciation.” Using a declining-balance factor 

of 200% allows a faster write-off and greater tax savings, 

provided that there is sufficient offsetting revenue. The IRS 

also allows a factor of 150%.

No. used: Number of pieces of capital equipment of each 

type used.

Total operating hours/shift: Number of hours/shift that 

all equipment in this category is operating. If there are two 

or more identical pieces of equipment in any category, then 

enter the total number of hours for all pieces of equipment 

in that category (for example, if two identical loaders are 

each operating for 7 hours during each shift, then enter “14” 

for loaders in Hours/shift).

Wages Worksheet

The Wages worksheet contains the inputs and calculations 

for wage costings for hourly wage earners. It does not 

contain information or calculations for salaried employees, 

whose earnings are calculated on the Administration worksheet. The inputs on the Wages worksheet are divided into 

five input tables:

1. Worker type and employees required

2. Employees hired

3. Standard work hours and available overtime hours/

worker

4. Base hourly wage rates plus allowances by worker type 

5. Individual worker accessories costs

Worker Type and Employees Required

Worker type: Worker classification required for the yard 

(scaler, grader, equipment operator, etc.).

Employees required (no./shift): Number of employees of 

each worker type required for each operating shift. Note 

that only whole numbers are allowed in this entry; that is, 

no fractions should be entered for part-time employees. The 

number of worker hours required will depend on the number 

of employees required, number of hours/shift, and number 

of shifts/year.

Employees Hired

“Employees hired” constitutes the actual number of employees hired of each worker type by year. If the number 

of employees hired of any worker type for any year is less 

than is actually required, a warning will appear. If a warning 

does appear, then the user should scroll down to the individual worker categories to determine in what year or years 

more workers are required. The only way to eliminate this 

warning is to hire more workers in the appropriate years, or 

to increase the maximum work days/year or the maximum 

work hours/day. 

Important: Hiring additional employees may reduce the 

total wages bill. Depending on how much money extra 

employees are paid for working overtime and what the fixed 

costs are per employee, it may be possible to reduce the 

total wages bill by hiring additional workers in some years. 

These numbers are worth experimenting with. Alternatively, 

use the Excel “Solver” algorithm to minimize total wages 

costs.
18

 General Technical Report FPL–GTR–165

Standard Work Hours and Available Overtime

“Standard work hours/worker” calculates the number of 

hours for which workers will earn adjusted hourly wage 

rates. The required inputs are as follows:

Days/year: Usually 365.

Less holidays: 10 statutory holidays—New Year’s Day, 

Martin Luther King Jr.’s Birthday, Washington’s Birthday, 

Memorial Day, Independence Day, Labor Day, Columbus 

Day, Veterans Day, Thanksgiving Day, and Christmas Day.

Less weekend days: Although workers may be required to 

work on weekends or on more than 5 days/week, these are 

days for which an employee will be paid an overtime 

allowance.

Less vacation days (optional): Worker annual vacation 

days.

Less allowed sick days (optional): Expected days that 

workers will not work because of illness.

“Available overtime hours/worker” calculates the number 

of hours that workers could earn their adjusted hourly wage 

rate plus an overtime allowance. The required inputs are as 

follows:

Maximum work days/year: Number of days worker could 

potentially work.

Maximum work hours/day: Maximum time worker could 

possibly work. The Base Hourly Wage Rates Plus Allowances by Worker Type input table calculates ordinary base 

rates, overtime, and annual fixed costs. The required inputs 

are as follows:

Unadjusted hourly wage rates: Base hourly rates stipulated on paychecks.

Statutory holiday pay: Percentage applied to unadjusted 

hourly wage rates to account for paid holidays.

Vacation pay: Percentage applied to unadjusted hourly 

wage rates to account for paid vacation days.

Sick leave: Percentage applied to unadjusted hourly wage 

rates to account for paid sick leave.

Retirement: Percentage applied to unadjusted hourly wage 

rates to account for payments to worker retirement funds.

Other allowances: Percentage applied to unadjusted hourly 

wage rates to account for any other worker allowances.

Hourly overtime factor: Percentage applied to adjusted 

hourly wage rates for overtime hours worked.

Base Hourly Wage Rates Plus Allowances

“Annual fixed costs/employee” calculates the fixed costs 

associated with hiring each employee. The fixed costs, in 

terms of dollars, are as follows:

Health insurance: Charges for worker health insurance 

paid by the firm.

Liability insurance: Liability insurance carried by the firm.

Labor accessories: Worker accessories paid for by the 

firm. Note that this amount is imported from the Individual 

Worker Accessories Costs input table described below. 

Other fixed costs: Any additional fixed costs/employee.

Crew Accessories Worksheet

The Crew Accessories worksheet contains general accessories for the crew, which include fire and safety equipment. 

Although these accessories would be itemized and depreciated as miscellaneous equipment for accounting purposes, 

they are likely to constitute only a small proportion of total 

costs. 

First aid equipment: Crew safety equipment.

Fire equipment: All fire tools—pumps, extinguishers, etc.

Other equipment: Any miscellaneous equipment.

Loose tools: Single number quantifying the value of miscellaneous loose tools.

Tool and equipment operating life: Estimate for tool and 

equipment life to calculate an annual allowance.

Administration Worksheet

The Adminstration worksheet contains costs that account for 

such administrative costs as salaried employees and clerical 

expense. Inputs required are as follows:

Salaried employees hired: Total number of salaried employees each year by employee classification.

Clerical employees hired: Total number of clerical employees each year by employee classification.

Clerical hours required: Number of clerical hours each 

year by employee classification.

Fixed costs/salaried employee (year 0): Fixed cost calculations for each salaried employee classification. These 

calculations require the input of ordinary salary, a perks 

percentage (such as company vehicle), health insurance, 

liability insurance, and other costs. All costs are in year

0 dollars.

Costs/clerical employee (year 0): Yearly clerical expense 

calculations. Require the input of unadjusted hourly wages 

and holiday pay, vacation pay, sick leave, and other allowances, all as a percentage of unadjusted hourly wages; retirement as a percentage of yearly wages; and health insurance, 

liability insurance, and other costs as lump sums. All costs 

are in year 0 dollars.
19

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

Payroll & other clerical expenses: Cost/employee to prepare payroll and other miscellaneous clerical expenses.

Other professional fees: Accounting, legal, and other professional fees.

Communications expenses: Any communications expenses, including telephone, fax, cell phones, and Internet 

service.

Other overheads expenses ($/year): Utilities, other insurance, bank overdraft charges, etc.

Other Costs Worksheet

The Other Costs worksheet is a catch-all for costs that have 

not been entered elsewhere. These costs are entered 

individually.

Working Capital Worksheet

The only user-defined variable on the Working Capital

worksheet is Working Capital Percent of Sales. This is the 

percentage of sales that working capital represents.
20

 General Technical Report FPL–GTR–165

Screenshot 1. Financial Indicators table from FINANCIAL SUMMARY worksheet. 

FINANCIAL INDICATORS Net present value Nominal IRR Real IRR

Before tax & finance $ 3,857,805 33.3% 29.5%

Before tax $ 7,661,568 43.1% 38.9%

After tax $ 7,297,222 27.1% 23.4%

IRR seed = 10.0%

Screenshot 2. Revenue & Cost Summary table from FINANCIAL SUMMARY worksheet. 

REVENUE & COST SUMMARY After-tax PV $/MBF (input) Pct. of sales Pct. of total costs

Sales revenue $ 210,327,955 $ 278.31 100.0% 103.6%

Less: variable costs

 Laminations costs (112,530,675) (148.90) -53.5% 55.4%

 Direct production costs (62,938,610) (83.28) -29.9% 31.0%

 Total variable costs (175,469,285) (232.18) ‐83.4% 86.4%

Subtotal: operating margin $ 34,858,670 $ 46.13 16.6% 17.2%

Less: fixed costs and overheads

 Plant and equipment at cost less salvage (7,452,816) (9.86) -3.5% 3.7%

 Administration and overheads (8,145,395) (10.78) -3.9% 4.0%

 Total fixed costs $ (15,598,211) $ (20.64) ‐7.4% 7.7%

Net present value before financing and tax $ 19,260,459 $ 25.49 9.2% 9.5%

Less: financing and working capital

 Net loan cost (141,383) (0.19) -0.1% 0.1%

 Working capital cost (3,283,703) (4.35) -1.6% 1.6%

 Total financing costs (3,425,086) (4.53) -1.6% 1.7%

Net present value before tax $ 15,835,373 $ 20.95 7.5% 7.8%

Less: total taxes (8,538,150) (11.30) ‐4.1% 4.2%

After-tax net present value (NPV) $ 7,297,222 $ 9.66 3.5% 3.6%

Note: to calculate the true break-even laminations cost, either iteratively or using Goal Seek, set the After-tax

 net present value (above) to $0 by changing the optional summary laminations input cost, below.

Screenshot 3. Break-Even Summary table from FINANCIAL SUMMARY worksheet. 

BREAK-EVEN SUMMARY Year 0 value Year 1 value

Optional summary laminations input cost ($/MBF) $ 165.84 $ 170.82

Calculated break-even laminations cost ($/MBF input) $ 165.76 $ 170.73

Weighted average laminations cost ($/MBF input) $ 165.84 $ 170.82

 Screenshot 1. Financial Indicators table for FINANCIAL SUMMARY worksheet.

Screenshot 2. Revenue & Cost Summary table from FINANCIAL SUMMARY worksheet.

Screenshot 3. Break-Even Summary table from FINANCIAL SUMMARY worksheet.

LamLum Screenshots 
21

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

Screenshot 4. Sensitivity analysis scaling factors and cost contingency allowances from FINANCIAL

SUMMARY worksheet. 

COST CONTINGENCY ALLOWANCES

Capital costs 10%

15%

10%

Working capital 10%

Direct production costs

Fixed costs and overheads

SENSITIVITY ANALYSIS SCALING FACTORS

Sales revenues 100.0%

Laminations costs 100.0%

Land & bldg. 100.0%

Misc. equipment 100.0%

Equipment & other inputs 100.0%

Rolling stock cost 100.0%

Wages 100.0%

Crew accessories 100.0%

Administration 100.0%

Other costs 100.0%

Working capital 100.0%

Screenshot 4. Sensitivity analysis scaling factors and cost contingency allowances from FINANCIAL 

SUMMARY worksheet.

Screenshot 5. Key cost-of-capital variables from FINANCIAL SUMMARY worksheet. 

KEY COST-OF-CAPITAL VARIABLES

Pre-tax required premium on risk capital 15.00%

Debt/Total capital 40.0%

COSTS OF CAPITAL†

Nominal equity cost of capital 21.0%

Nominal before-tax weighted average cost of capital 16.6%

Nominal after-tax weighted average cost of capital 9.5%

Real after-tax weighted average cost of capital 6.3%

†

 Imported from the Gen. Assumptions worksheet

Screenshot 5. Key cost-of-capital variables from FINANCIAL SUMMARY worksheet.
22

 General Technical Report FPL–GTR–165

Screenshot 6 (continued on next page). First 6 of 20 years of cash flows from CASH FLOW 

SUMMARY worksheet. 

 ———————————————————— Year—————————————————————

SUMMARY CASH

 FLOW TABLE 2006 2007 2008 2009 2010 2011

PLANT AND EQUIP. CASH FLOWS

Plant and equipment costs (2,456,603) - (106,090) (136,591) (247,612) (2,347,270) 

Contingency allowance (245,660) - (10,609) (13,659) (24,761) (234,727) 

Salvage values - 21,218 32,782 22,510 81,265 

Terminal values

Net capital cash flows $ (2,702,263) $ - $ (95,481) $ (117,468) $ (249,863) $ (2,500,732)

PRODUCT SALES

Processed primary products 11,292,442 16,283,701 21,564,273 22,211,201 22,877,537 

Merchantable residues 61,875 85,490 108,269 111,517 114,863 

Subtotal: net sales $ 11,354,317 $ 16,369,191 $ 21,672,542 $ 22,322,718 $ 22,992,400

PRODUCTION COSTS

Laminations input cost (6,063,671) (8,590,482) (11,173,198) (11,508,394) (11,853,646) 

Direct production costs

 Equipment operating costs (2,242,277) (3,124,713) (4,065,168) (4,166,877) (4,307,679) 

 Wages and worker accessories (8,509) (774,537) (1,098,754) (1,470,622) (1,495,970) (1,509,915) 

 Unmerchantable residues disposal (65,593) (89,750) (112,453) (115,826) (119,301) 

 Contingency allowance (1,276) (462,869) (647,715) (848,206) (867,800) (891,563) 

Subtotal: direct production costs $ (9,786) $ (3,545,275) $ (4,960,932) $ (6,496,449) $ (6,646,474) $ (6,828,459)

Annual fixed & overhead costs

 Annual land lease cost (20,000) (43,074) (45,254) (47,543) (49,949) (52,477) 

 Annual building lease cost - - - - - - 

 Land and buildings

 repairs and maintenance (3,321) (3,375) (3,428) (3,481) (3,533) 

 Administration (386,429) (397,932) (516,277) (565,093) (581,912) 

 Other costs (2,575) (2,652) (2,732) (2,814) (2,898) 

 Insurance costs (4,385) (79,267) (74,669) (75,563) (76,103) (85,115) 

 Ad valorem (property) taxes (21,453) (31,992) (23,987) (20,150) (19,636) (49,553) 

 Contingency allowance (4,584) (54,666) (54,787) (66,569) (71,708) (77,549) 

Subtotal: fixed costs and overheads $ (50,422) $ (601,325) $ (602,656) $ (732,263) $ (788,783) $ (853,036)

Operating income (loss) $ (60,208) $ 1,144,046 $ 2,215,122 $ 3,270,632 $ 3,379,068 $ 3,457,260

Working capital cash flow $ (1,873,462) $ (827,454) $ (875,053) $ (107,279) $ (110,497) $ (113,812)

Screenshot 6 (continued on next page). First 6 of 20 years of cash flows from CASH FLOW SUMMARY

worksheet.
23

Screenshot 6 (continued). First 6 of 20 years of cash flows from CASH FLOW SUMMARY worksheet. 

SUMMARY CASH FLOW ———————————————————— Year ————————————————————

 TABLE (continued) 2006 2007 2008 2009 2010 2011

Net capital cash flows $ (2,702,263) $ - $ (95,481) $ (117,468) $ (249,863) $ (2,500,732)

Operating income (loss) (60,208) 931,382 1,915,339 2,882,746 2,979,545 3,045,752 

Working capital cash flow (1,873,462) (827,454) (875,053) (107,279) (110,497) (113,812) 

Cash flow before tax and finance $ (4,635,933) $ 103,927 $ 944,806 $ 2,657,999 $ 2,619,185 $ 431,207

FINANCING CASH FLOWS

New borrowing (loan principal) 1,661,756 300,892 360,637 93,647 139,226 980,294 

Bank financing fees (9,802) (3,009) (3,606) (936) (1,392) (9,803) 

Loan interest payments (165,556) (177,673) (193,970) (181,880) (172,888) 

Loan principal repayments (180,151) (198,123) (215,049) (229,688) (249,392) 

Loan principal balloon repayment

Subtotal: financing cash flows $ 1,651,954 $ (47,823) $ (18,765) $ (316,309) $ (273,735) $ 548,212

Cash flow before tax $ (2,983,979) $ 56,104 $ 926,040 $ 2,341,690 $ 2,345,450 $ 979,419

NON-CASH ADJUSTMENTS

Depreciation expense (615,527) (434,776) (354,276) (341,149) (345,414) 

Taxable gain (loss) on salvage - (14,782) 5,782 (28,642) (250,368) 

Taxable gain (loss) on terminal values

Subtotal: non-cash adjustments $ (615,527) $ (449,558) $ (348,494) $ (369,791) $ (595,782)

Taxable cash flows $ (70,010) $ 147,290 $ 1,284,502 $ 2,339,345 $ 2,426,482 $ 2,267,279

CAPITAL GAINS TAXES

 Capital gain (loss) on

 land & buildings sale

 Federal capital gains tax

 State capital gains tax

Subtotal: capital gains taxes

INCOME TAXES

 Federal income taxes 23,103 (48,606) (423,886) (771,984) (800,739) (748,202) 

 State income taxes 7,001 (14,729) (128,450) (233,935) (242,648) (226,728) 

Subtotal: income taxes $ 30,104 $ (63,335) $ (552,336) $ (1,005,919) $ (1,043,387) $ (974,930)

After-tax cash flow $ (2,953,874) $ (7,230) $ 373,704 $ 1,335,771 $ 1,302,063 $ 4,489

Screenshot 6 (continued). First 6 of 20 years of cash flows from CASH FLOW SUMMARY worksheet.

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants
24

 General Technical Report FPL–GTR–165

Screenshot 7. Facility Full-Time Operation Shift Hours table from General Assumptions worksheet. 

Facility full-time operation shift hours Plant

operating Shift hours/

days/year year

Shift 1 250 2,000 

Shift 2 250 2,000 

Shift 3 250 2,000 

Shift 4 - - 

Standard hours/shift 8.0 Shift hrs./year 6,000 

Maximum shift hours/day 24 Shifts/year 750 

Full time operating days/year 250.0 

Screenshot 7. Facility Full-Time Operation Shift Hours table from General Assumptions

worksheet.

Screenshot 8. Process capacity utilization factors for first 6 of 20 years from General

Assumptions worksheet. 

 ———————————— Year———————————————

Process capacity utilization 2006 2007 2008 2009 2010 2011

Percent of full-time

 operation utilized 50% 70% 90% 90% 90%

Shifts/year 375 525 675 675 675 

Shift 1 250 250 250 250 250 

Shift 2 125 250 250 250 250 

Shift 3 - 25 175 175 175 

Shift 4 - - - - - 

Screenshot 8. Process capacity utilization factors for first 6 of 20 years from General 

Assumptions worksheet.

Screenshot 9. Process plant revenues automatically adjusted for inflation for first 6 of 20 years years 

from Production Revenues worksheet. 

ASSUMPTIONS

InflationadjustedManually

entered

Process plant revenues are... x (tick one)

Because you chose 'Inflation-adjusted,' only the first year's.

 product prices will be used below.

Product Prices (Costs) ($/unit)

 ——————————————— Year —————————————————

2006 2007 2008 2009 2010 2011

Std. LamHeaders (lineal ft.) $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00

LamLumber (MBF) $ 350.00 $ 250.00 $ 250.00 $ 250.00 $ 250.00 $ 250.00

LamTrusses (units) $ 75.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00 $ 200.00

LamPosts (units) $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00

--------- $ - $ - $ - $ - $ - $ -

--------- $ - $ - $ - $ - $ - $ -

Merchantable processed residue (tons) $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00

Unmerchantable processed residue (tons) $ (5.00) $ (5.00) $ (5.00) $ (5.00) $ (5.00) $ (5.00)

IMPORTANT! Because you chose 'Inflation-adjusted,' any price entries beyond the first year will be ignored.

Screenshot 9. Process plant revenues automatically adjusted for inflation for first 6 of 20 years from 

Production Revenues worksheet.
25

Screenshot 10. Process plant revenues manually adjusted for first 6 of 20 years from 

Production Revenues worksheet.

InflationadjustedManually

entered

Process plant revenues are... x (tick one)

Because you chose 'Manually entered,' you MUST enter

 product prices for each year below.

Product Prices (Costs) ($/unit)

 ——————————————— Year—————————————————

2006 2007 2008 2009 2010 2011

Std. LamHeaders (lineal ft.) $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00

LamLumber (MBF) $ 350.00 $ 350.00 $ 350.00 $ 350.00 $ 350.00 $ 350.00

LamTrusses (units) $ 75.00 $ 75.00 $ 75.00 $ 75.00 $ 75.00 $ 75.00

LamPosts (units) $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00

--------- $ - $ - $ - $ - $ - $ -

--------- $ - $ - $ - $ - $ - $ -

Merchantable processed residue (tons) $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00

Unmerchantable processed residue (tons) $ (5.00) $ (5.00) $ (5.00) $ (5.00) $ (5.00) $ (5.00)

IMPORTANT! Because you chose 'Manually entered,' make sure that you enter product prices for EACH year.

Screenshot 10. Process plant revenues manually adjusted for first 6 of 20 years from Production 

Revenues worksheet.

Screenshot 11. Revenue Summary for first 6 of 20 years from Production Revenues worksheet. 

 ——————————————Year ——————————————————

REVENUE SUMMARY 2006 2007 2008 2009 2010 2011

Primary products sales revenues

Std. LamHeaders (lineal ft.) $ 3,992,317 $ 5,756,921 $ 7,623,808 $ 7,852,522 $ 8,088,098

LamLumber (MBF) 7,300,125 10,526,780 13,940,465 14,358,679 14,789,439 

LamTrusses (units) - - - - - 

LamPosts (units) - - - - - 

--------- - - - - - 

--------- - - - - - 

Subtotal: primary products sales $ 11,292,442 $ 16,283,701 $ 21,564,273 $ 22,211,201 $ 22,877,537

Merchantable residues sales

Merchantable processed residue $ 4,514 $ 6,510 $ 8,621 $ 8,880 $ 9,146

Merchantable unprocessed residue 57,361 78,980 99,648 102,638 105,717 

Subtotal: merchantable residues $ 61,875 $ 85,490 $ 108,269 $ 111,517 $ 114,863

Total product sales $ 11,354,317 $ 16,369,191 $ 21,672,542 $ 22,322,718 $ 22,992,400

Unmerchantable residues disposal

Unmerchantable processed residue $ (3,386) $ (4,882) $ (6,466) $ (6,660) $ (6,859)

Unmerchantable unprocessed residue (65,593) (89,750) (112,453) (115,826) (119,301) 

Total residue disposal costs $ (68,979) $ (94,633) $ (118,919) $ (122,486) $ (126,161)

Screenshot 11. Revenue Summary for first 6 of 20 years from Production Revenues worksheet.

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants
26

Research Note FPL–RN–0300

Screenshot 12. Present Values of Laminations Cash Flows table from Laminations Costs & 

Conversions worksheet. 

PRESENT VALUES OF LAMINATIONS CASH FLOWS

Total $/unit

Present value of laminations input costs $ (112,530,675) $ (148.90) per MBF

Present value of merchantable unprocessed residue $ 974,877 $ 10.00 per ton

Present value of unmerchantable unprocessed residue $ (1,101,453) $ (5.00) per ton

Present value of net cost of utilizable laminations $ (112,657,251) $ (262.31) per MBF

Screenshot 12. Present Values of Laminations Cash Flows table from Laminations Costs & 

Conversions worksheet.

Screenshot 13. Summary Laminations Cash Flows and Summary Physical Inputs and Outputs tables 

from Laminations Costs & Conversions worksheet. 

 ————————————————— Year ——————————————————

SUMMARY LAMINATIONS CASH FLOWS Present value 2007 2008 2009 2010 2011

Total laminations input cost $ (112,530,675) $ (6,276,335) $ (8,890,264) $ (11,561,084) $ (11,907,916) $ (12,265,154)

Merchantable unprocessed residue revenue $ 974,877 $ 57,361 $ 78,980 $ 99,648 $ 102,638 $ 105,717

Unmerchantable unprocessed residue disposal cost $ (1,101,453) $ (65,593) $ (89,750) $ (112,453) $ (115,826) $ (119,301)

Net cost of utilizable laminations ($112,657,251) $ (6,284,568) $ (8,901,034) $ (11,573,888) $ (11,921,105) $ (12,278,738)

SUMMARY PHYSICAL INPUTS AND OUTPUTS Present volume

Total wood inputs (MBF) 755,736 41,294 56,515 70,994 70,994 70,994 Utilizable laminations (MBF) 429,475 22,500 31,500 40,500 40,500 40,500 Merchantable unprocessed residue (tons) 97,488 5,569 7,445 9,119 9,119 9,119 Unmerchantable unprocessed residue (tons) 220,291 12,736 16,920 20,582 20,582 20,582 

Screenshot 13. Summary Laminations Cash Flows and Summary Physical Inputs and Outputs tables 

from Laminations Costs & Conversions worksheet.

Screenshot 14. Laminations Costs by Grade table from Laminations Costs & Conversions

worksheet. 

Present volume Present volume Cost of Net cost of

Less: PV Plus: PV of input of utilizable input utilizable

LAMINATIONS COSTS Present value of merch. of unmerch. NPV laminations laminations laminations laminations

 BY GRADE (Year 0 dollars) of total cost residue residue of total cost (MBF) (MBF) ($/MBF) ($/MBF)

Economy grade $ (24,328,905) $ 86,169 $ (64,626) $ (24,307,363) 147,448

 

125,331

 

$ (165.00) $ (193.95)

Sub-economy grade (88,201,770)

 

888,709

 

(1,036,827)

 

(88,349,888)

 

608,288

 

304,144

 

(145.00)

 

(290.49)

 Sub-economy grade II -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species‐Grade 4 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species‐Grade 4 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 5 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 7 -

 

-

 

-

 

-

 

-

 

-

 

- -

 Lam Species-Grade 8 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 9 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 10 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Total or weighted average $ (112,530,675) $ 974,877 $ (1,101,453) $ (112,657,251) 755,736 

 

429,475

 

$ (148.90) $ (262.31)

I

Screenshot 14. Laminations Costs by Grade table from Laminations Costs & Conversions worksheet.

Screenshot 15. Laminations Input Costs table from Laminations Costs & 

Conversions worksheet.

LAMINATIONS INPUT COSTS ($/MBF)

 ————————————————— Year ———————————————————

Lamination input grade name Present value 2007 2008 2009 2010 2011

Economy grade $ 165.00 $ 165.00 $ 165.00 $ 165.00 $ 165.00 $ 165.00

Sub-economy grade I $ 145.00 $ 145.00 $ 145.00 $ 145.00 $ 145.00 $ 145.00

Sub-economy grade II $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 4 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 4 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 5 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 7 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 8 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 9 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 10 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Because you ticked the box stating that the laminations input costs are inflation-adjusted, these present value costs will be adjusted automatically.

Screenshot 15. Laminations Input Costs table from Laminations Costs & Conversions worksheet.

Screenshot 14. Laminations Costs by Grade table from Laminations Costs & Conversions

worksheet. 

Present volume Present volume Cost of Net cost of

Less: PV Plus: PV of input of utilizable input utilizable

LAMINATIONS COSTS Present value of merch. of unmerch. NPV laminations laminations laminations laminations

 BY GRADE (Year 0 dollars) of total cost residue residue of total cost (MBF) (MBF) ($/MBF) ($/MBF)

Economy grade $ (24,328,905) $ 86,169 $ (64,626) $ (24,307,363) 147,448

 

125,331

 

$ (165.00) $ (193.95)

Sub-economy grade (88,201,770)

 

888,709

 

(1,036,827)

 

(88,349,888)

 

608,288

 

304,144

 

(145.00)

 

(290.49)

 Sub-economy grade II -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species‐Grade 4 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species‐Grade 4 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 5 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 7 -

 

-

 

-

 

-

 

-

 

-

 

- -

 Lam Species-Grade 8 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 9 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 Lam Species-Grade 10 -

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Total or weighted average $ (112,530,675) $ 974,877 $ (1,101,453) $ (112,657,251) 755,736 

 

429,475

 

$ (148.90) $ (262.31)

I

Screenshot 15. Laminations Input Costs table from Laminations Costs & 

Conversions worksheet.

LAMINATIONS INPUT COSTS ($/MBF)

 ————————————————— Year ———————————————————

Lamination input grade name Present value 2007 2008 2009 2010 2011

Economy grade $ 165.00 $ 165.00 $ 165.00 $ 165.00 $ 165.00 $ 165.00

Sub-economy grade I $ 145.00 $ 145.00 $ 145.00 $ 145.00 $ 145.00 $ 145.00

Sub-economy grade II $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 4 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 4 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 5 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 7 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 8 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 9 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Lam Species-Grade 10 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84 $ 165.84

Because you ticked the box stating that the laminations input costs are inflation-adjusted, these present value costs will be adjusted automatically.
27

Screenshot 16. First 6 of 20 years of laminations species and grade mix inputs from 

Laminations Costs & Conversions worksheet. 

LAMINATIONS INPUT SPECIES AND GRADE MIX

 ——————————— Year ———————————————————

Lamination input grade name 2006 2007 2008 2009 2010 2011

Economy grade 20% 25% 30% 30% 30%

Sub-economy grade I 80% 75% 70% 70% 70%

Sub-economy grade II 0% 0%

Lam Species‐Grade 4

Lam Species‐Grade 4

Lam Species-Grade 5

Lam Species-Grade 7

Lam Species-Grade 8

Lam Species-Grade 9

Lam Species-Grade 10

Total 100% 100% 100% 100% 100%

Screenshot 16. First 6 of 20 years of laminations species and grade mix inputs from Laminations 

Costs & Conversions worksheet.

Screenshot 17. Laminations product recoveries from Laminations Costs & Conversions worksheet. 

LAMINATIONS PRODUCT RECOVERIES

Lamination input grade name

Utilizable 

laminations

Merchantable

residue

Unmerchantable 

residue Total

Economy grade 85% 6% 9.0% 100.0% Sub-economy grade I 50% 15% 35.0% 100.0% Sub-economy grade II

Lam Species‐Grade 4 - - Lam Species‐Grade 4 - - Lam Species-Grade 5 - - Lam Species-Grade 7 - - Lam Species-Grade 8 - - Lam Species-Grade 9 - - Lam Species-Grade 10 - - 

65% 15% 20.0% 100.0%

Screenshot 17. Laminations product recoveries from Laminations Costs & Conversions worksheet.

Screenshot 18. First 5 of 20 years of total laminations calculations from Laminations Costs & 

Conversions worksheet. 

TOTAL LAMINATIONS (MBF)

 —————————————— Year ————————————————

Lamination input grade name Present volume 2007 2008 2009 2010 2011

Economy grade 147,448 5,294 9,265 14,294 14,294 14,294 Sub-economy grade I 608,288 36,000 47,250 56,700 56,700 56,700 Sub-economy grade II - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species-Grade 5 - - - - - - Lam Species-Grade 7 - - - - - - Lam Species-Grade 8 - - - - - - Lam Species-Grade 9 - - - - - - Lam Species-Grade 10 - - - - - - Total 755,736 41,294 56,515 70,994 70,994 70,994 

Screenshot 18. First 5 of 20 years of total laminations calculations from Laminations Costs & 

Conversions worksheet.

Screenshot 19. First 5 of 20 years of total laminations input cost calculations from Laminations 

Costs & Conversions worksheet. 

TOTAL LAMINATIONS INPUT COST ————————————————— Year ———————————————————

Lamination input grade name Present value 2007 2008 2009 2010 2011

Economy grade $ (24,328,905) $ (899,735) $ (1,621,773) $ (2,577,229) $ (2,654,546) $ (2,734,182)

Sub-economy grade I (88,201,770) (5,376,600) (7,268,491) (8,983,855) (9,253,371) (9,530,972) Sub-economy grade II - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species-Grade 5 - - - - - - Lam Species-Grade 7 - - - - - - Lam Species-Grade 8 - - - - - - Lam Species-Grade 9 - - - - - - Lam Species-Grade 10 - - - - - - Total $ (112,530,675) $ (6,276,335) $ (8,890,264) $ (11,561,084) $ (11,907,916) $ (12,265,154)

Screenshot 19. First 5 of 20 years of total laminations input cost calculations from Laminations 

Costs & Conversions worksheet.

LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

Screenshot 16. First 6 of 20 years of laminations species and grade mix inputs from 

Laminations Costs & Conversions worksheet. 

LAMINATIONS INPUT SPECIES AND GRADE MIX

 ——————————— Year ———————————————————

Lamination input grade name 2006 2007 2008 2009 2010 2011

Economy grade 20% 25% 30% 30% 30%

Sub-economy grade I 80% 75% 70% 70% 70%

Sub-economy grade II 0% 0%

Lam Species‐Grade 4

Lam Species‐Grade 4

Lam Species-Grade 5

Lam Species-Grade 7

Lam Species-Grade 8

Lam Species-Grade 9

Lam Species-Grade 10

Total 100% 100% 100% 100% 100%

Screenshot 17. Laminations product recoveries from Laminations Costs & Conversions worksheet. 

LAMINATIONS PRODUCT RECOVERIES

Lamination input grade name

Utilizable 

laminations

Merchantable

residue

Unmerchantable 

residue Total

Economy grade 85% 6% 9.0% 100.0% Sub-economy grade I 50% 15% 35.0% 100.0% Sub-economy grade II

Lam Species‐Grade 4 - - Lam Species‐Grade 4 - - Lam Species-Grade 5 - - Lam Species-Grade 7 - - Lam Species-Grade 8 - - Lam Species-Grade 9 - - Lam Species-Grade 10 - - 

65% 15% 20.0% 100.0%

Screenshot 18. First 5 of 20 years of total laminations calculations from Laminations Costs & 

Conversions worksheet. 

TOTAL LAMINATIONS (MBF)

 —————————————— Year ————————————————

Lamination input grade name Present volume 2007 2008 2009 2010 2011

Economy grade 147,448 5,294 9,265 14,294 14,294 14,294 Sub-economy grade I 608,288 36,000 47,250 56,700 56,700 56,700 Sub-economy grade II - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species-Grade 5 - - - - - - Lam Species-Grade 7 - - - - - - Lam Species-Grade 8 - - - - - - Lam Species-Grade 9 - - - - - - Lam Species-Grade 10 - - - - - - Total 755,736 41,294 56,515 70,994 70,994 70,994 

Screenshot 19. First 5 of 20 years of total laminations input cost calculations from Laminations 

Costs & Conversions worksheet. 

TOTAL LAMINATIONS INPUT COST ————————————————— Year ———————————————————

Lamination input grade name Present value 2007 2008 2009 2010 2011

Economy grade $ (24,328,905) $ (899,735) $ (1,621,773) $ (2,577,229) $ (2,654,546) $ (2,734,182)

Sub-economy grade I (88,201,770) (5,376,600) (7,268,491) (8,983,855) (9,253,371) (9,530,972) Sub-economy grade II - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species‐Grade 4 - - - - - - Lam Species-Grade 5 - - - - - - Lam Species-Grade 7 - - - - - - Lam Species-Grade 8 - - - - - - Lam Species-Grade 9 - - - - - - Lam Species-Grade 10 - - - - - - Total $ (112,530,675) $ (6,276,335) $ (8,890,264) $ (11,561,084) $ (11,907,916) $ (12,265,154)
Research Note FPL–RN–0300

28

Screenshot 20. Present values and first 5 of 20 years of Consolidated Operating Costs summary 

tables from Consolidated Operating Costs worksheet. 

SUMMARY PRESENT VALUES OF OPERATING COSTS

Total after tax PV $/MBF input

Present value of the operating costs (yr. 0 dollars) $ (85,057,882) $ (112.55)

After-tax ————————————— Year ——————————————

present value 2007 2008 2009 2010 2011

Weighted average break-even mfg. cost recovery $ (85,057,882) $ (4,787,071) $ (6,748,083) $ (8,731,292) $ (8,993,231) $ (9,263,028)

BOTTOM LINE OPERATING COST SUMMARY

CASH COSTS BEFORE TAX & FINANCING $ (4,635,933) $ (4,977,440) $ (6,539,004) $ (7,459,925) $ (7,802,277) $ (10,302,898)

CASH COSTS BEFORE TAX $ (2,983,979) $ (5,025,263) $ (6,557,770) $ (7,776,234) $ (8,076,012) $ (9,754,687)

AFTER TAX CASH COSTS $ (2,953,874) $ (2,903,610) $ (3,892,067) $ (4,431,445) $ (4,638,170) $ (6,113,951)

Screenshot 20. Present values and first 5 of 20 years of Consolidated Operating Costs summary 

tables from Consolidated Operating Costs worksheet.

Screenshot 21. First 5 of 20 years of wages summaries from Wages worksheet. 

 ————————————————— Year ———————————————

WAGES SUMMARY BY WORKER TYPE 2007 2008 2009 2010 2011

Wood handling $ (273,365) $ (380,236) $ (511,112) $ (507,928) $ (504,113)

Wood processing (232,645) (340,414) (445,772) (459,041) (472,707) Wood finishing (140,605) (206,110) (275,403) (283,576) (291,993) Rolling stock operators (77,017) (102,969) (144,237) (148,535) (141,334) Other (48,714) (66,768) (91,773) (94,496) (97,301) Total employment cost $ (772,345) $ (1,096,497) $ (1,468,297) $ (1,493,575) $ (1,507,449)

WAGES SUMMARY BY WAGE TYPE

Hourly wages (standard shift hours) $ (342,685) $ (531,408) $ (660,490) $ (722,647) $ (819,092)

Overtime wages (256,287) (313,299) (480,469) (430,863) (330,755) Subtotal: hourly wages $ (598,972) $ (844,707) $ (1,140,959) $ (1,153,510) $ (1,149,846)

Retirement (17,969) (25,341) (34,229) (34,605) (34,495) Social Security (37,136) (52,372) (70,739) (71,518) (71,290) Medicare (8,685) (12,248) (16,544) (16,726) (16,673) 

Unemployment insurance - Federal (728) (1,064) (1,288) (1,344) (1,456) Unemployment insurance - State (5,733) (8,379) (10,143) (10,584) (11,466) Workers' compensation insurance (29,949) (42,235) (57,048) (57,676) (57,492) Other fixed costs (73,173) (110,150) (137,347) (147,613) (164,730) Subtotal: overheads for hourly employees $ (173,373) $ (251,790) $ (327,338) $ (340,065) $ (357,603)

Total employment cost $ (772,345) $ (1,096,497) $ (1,468,297) $ (1,493,575) $ (1,507,449)

Screenshot 21. First 5 of 20 years of wages summaries from Wages worksheet.

Screenshot 22. Employees Required table from Wages worksheet. 

EMPLOYEES REQUIRED (No./shift)

Worker type First shift Second shift Third shift Fourth shift

Wood handling 3 3 3 3 

Wood processing 4 4 4 4 

Wood finishing 3 3 3 3 

Rolling stock operators 1 1 1 1 

Other 1 1 1 1 

Total 12 12 12 12 

Note: max. operators needed/shift 5 

Screenshot 22. Employees Required table from Wages worksheet.
LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

29

Screenshot 23. First 5 of 20 years of employees hired inputs from Wages worksheet. 

EMPLOYEES HIRED (No./year) ————————————————— Year —————————————————

Worker type 2006 2007 2008 2009 2010

Wood handling 3 5 6 7 8 Wood processing 4 5 7 7 7 Wood finishing 4 5 6 6 6 Rolling stock operators 1 2 2 2 3 Other 1 2 2 2 2 Total 13 19 23 24 26 

Over-worked warnings. See individual worker catagory calculations below if any of these warnings appear.

Wood handling

Wood processing

Wood finishing

Rolling stock operators

Other

Screenshot 23. First 5 of 20 years of employees hired inputs from Wages worksheet.

Screenshot 24. First 7 of 20 years of wages and hours calculations for wood handling workers from 

Wages worksheet. 

 ————————————————— Year ———————————————

Wood handling 2007 2008 2009 2010 2011

Hourly wages (standard shift hours) $ 78,046 $ 200,777 $ 248,258 $ 298,048 $ 350,521

Overtime wages 161,961 100,814 160,158 100,943 38,153 Subtotal: hourly wages $ 240,007 $ 301,590 $ 408,416 $ 398,991 $ 388,674

Retirement 7,200 9,048 12,252 11,970 11,660 Social Security 11,160 18,699 25,322 24,737 24,098 Medicare 3,480 4,373 5,922 5,785 5,636 Unemployment insurance - Federal 112 280 336 392 448 Unemployment insurance - State 882 2,205 2,646 3,087 3,528 

Workers' compensation - State 12,000 15,080 20,421 19,950 19,434 Fixed costs 11,247 28,962 35,797 43,016 50,636 Total employment cost/worker $ 286,089 $ 380,236 $ 511,112 $ 507,928 $ 504,113

Individual employee calculations

Annual total hours worked 4,500 2,520 2,700 2,314 2,025 Shift 1 hours worked 2,000 2,000 2,000 2,000 2,000 Shift 2 hours worked 1,000 520 700 314 25 Shift 3 hours worked - - - - - Shift 4 hours worked - - - - - Standard hours worked 1,888 1,888 1,888 1,888 1,888 Overtime hours worked 2,612 632 812 426 137 

Total remaining available hours (924) 1,056 876 1,262 1,551 Weighted average hourly base wages $ 20.67 $ 21.27 $ 21.92 $ 22.55 $ 23.21

Hourly overtime wages $ 31.00 $ 31.90 $ 32.87 $ 33.83 $ 34.81

Total hourly wages (standard shift hours) $ 39,023 $ 40,155 $ 41,376 $ 42,578 $ 43,815

Total overtime wages 80,981 20,163 26,693 14,420 4,769 Subtotal: yearly wages $ 120,003 $ 60,318 $ 68,069 $ 56,999 $ 48,584

Retirement 3,600 1,810 2,042 1,710 1,458 Social Security 5,580 3,740 4,220 3,534 3,012 Medicare 1,740 875 987 826 704 Unemployment insurance - Federal 56 56 56 56 56 Unemployment insurance - State 441 441 441 441 441 

Workers' compensation insurance 6,000 3,016 3,403 2,850 2,429 Other fixed costs 5,624 5,792 5,966 6,145 6,329 Total employment cost/worker $ 143,044 $ 76,047 $ 85,185 $ 72,561 $ 63,014

WARNING! Your total remaining available hours for at least one year is negative.

 You should either reduce the number of workers required, hire more workers in these years or increase your maximum yearly 

hours/employee.

Screenshot 24. First 7 of 20 years of wages and hours calculations for wood handling workers from 

Wages worksheet.

 You should either reduce the number of workers required, hire more workers in these years or increase your maximum yearly hours/employee.
Research Note FPL–RN–0300

30

Screenshot 25. Standard Work Hours per Worker and Available Overtime Hours per Worker tables 

from Wages worksheet. 

Days/year

Less: Holidays

Less: weekend days

Less: vacation days (optional)

Less: allowed sick days (optional)

Available workdays

Standard hours/shift

Standard shift hours/year

Maximum work days/year

Maximum work hours/day

Maximum work hours/year

Less: standard shift hours/year

Maximum overtime hours/year

STANDARD WORK HOURS PER WORKER AVAILABLE OVERTIME HOURS PER WORKER

365 298 10 12 104 3,576 10 1,888 5 1,688 

236 8 1,888 

Screenshot 25. Standard Work Hours per Worker and Available Overtime Hours 

per Worker tables from Wages worksheet.

Screenshot 26. Base Hourly Wage Rates Plus Allowances by Worker Type table from Wages

worksheet. 

BASE HOURLY WAGE RATES PLUS ALLOWANCES BY WORKER TYPE (Year 0 dollars)

Wood handling Wood processing Wood finishing Other

Unadjusted hourly wage rates $ 18.00 $ 11.00 $ 9.00 $ 15.00 $ 9.00

Adjustments

 Statutory holiday pay 4.1% 4.1% 4.1% 4.1% 4.1%

 Vacation pay 4.1% 4.1% 4.1% 4.1% 4.1%

 Sick leave 2.1% 2.1% 2.1% 2.1% 2.1%

 Other allowances 1.0% 1.0% 1.0% 1.0% 1.0%

Total hourly adjustments $ 2.02 $ 1.23 $ 1.01 $ 1.68 $ 1.01

Adjusted first shift gross hourly wage rates $ 20.02 $ 12.23 $ 10.01 $ 16.68 $ 10.01

Second shift hourly premium $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15

Third shift hourly premium $ 0.25 $ 0.25 $ 0.25 $ 0.25 $ 0.25

Fourth shift hourly premium $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30

Hourly overtime factor 1.5 1.5 1.5 1.5 1.5

Retirement 3.0% 3.0% 3.0% 3.0% 3.0%

Annual fixed costs/employee

 Health insurance $ 2,400 $ 2,400 $ 2,400 $ 2,400 $ 2,400

 Liability insurance $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000

 Labor accessories (from below) $ 101 $ 114 $ 101 $ 143 $ 30

 Other fixed costs $ 2,000 $ 2,000 $ 2,000 $ 2,000 $ 2,000

Total annual fixed costs/employee $ 5,501 $ 5,514 $ 5,501 $ 5,543 $ 5,430

Rolling 

stock operators

Screenshot 26. Base Hourly Wage Rates Plus Allowances by Worker Type table from Wages 

worksheet.

Screenshot 25. Standard Work Hours per Worker and Available Overtime Hours per Worker tables 

from Wages worksheet. 

Days/year

Less: Holidays

Less: weekend days

Less: vacation days (optional)

Less: allowed sick days (optional)

Available workdays

Standard hours/shift

Standard shift hours/year

Maximum work days/year

Maximum work hours/day

Maximum work hours/year

Less: standard shift hours/year

Maximum overtime hours/year

STANDARD WORK HOURS PER WORKER AVAILABLE OVERTIME HOURS PER WORKER

365 298 10 12 104 3,576 10 1,888 5 1,688 

236 8 1,888 

STANDARD WORK HOURS PER WORKER AVAILABLE OVERTIME HOURS PER WORKER
LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

31

Screenshot 27. Individual Worker Accessories and Costs table from Wages worksheet. 

INDIVIDUAL WORKER ————— Quantity required (units/year) —————

 ACCESSORIES AND COSTS Wood handling Wood processing Wood finishing Rolling stock operators Other Cost/item

Ear muffs G4 1 1 1 1 $ 12.87

Hard hat 1 1 1 1 1 $ 16.98

Hard hat 1 1 1 1 1 $ 16.98

Hi-vis vest 2 2 1 3 $ 12.95

Screenshot 27. Individual Worker Accessories and Costs table from Wages worksheet.

Screenshot 28. First 5 of 20 years of shift hours required calculations from Wages worksheet. 

 ————————————————Year ———————————————

SHIFT HOURS REQUIRED CALCULATION 2007 2008 2009 2010 2011

Total shift hours

Shift 1 2,000 2,000 2,000 2,000 2,000 Shift 2 1,000 2,000 2,000 2,000 2,000 Shift 3 - 200 1,400 1,400 1,400 

Shift 4 - - - - - Total shifts/year 375 525 675 675 675 Operating hours/year 3,000 4,200 5,400 5,400 5,400 Shift hours required by employee group

Wood handling 9,000 12,600 16,200 16,200 16,200 Wood processing 12,000 16,800 21,600 21,600 21,600 Wood finishing 9,000 12,600 16,200 16,200 16,200 Rolling stock operators 3,000 4,200 5,400 5,400 5,400 

Other 3,000 4,200 5,400 5,400 5,400 Total shift hours 36,000 50,400 64,800 64,800 64,800 

Screenshot 28. First 5 of 20 years of shift hours required calculations from Wages worksheet.
Research Note FPL–RN–0300

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Screenshot 29. Crew Accessories worksheet. 

2005

DESC. Quantity $/ITEM TOTAL $

First aid equipment

Stretcher 1 $ 324.44 $ 324

Blankets 2 56.84 114 

5-Person First Aid Kit 1 65.56 66 

1-Person First Aid Kit 2 25.00 50 

- 

- 

Fire equipment

4lb Axe 2 $ 59.77 120 

Atlas #2 Shovel 5 37.77 189 

- 

1kg Extinguisher 2 57.86 116 

Rega Fire Pump 2 265.77 532 

- 

SUB-TOTAL: First aid and fire equipment $ 1,509

2005

DESC. Quantity $/ITEM TOTAL $

Other equipment

$ -

- 

- 

SUB-TOTAL: Other equipment $ -

Loose tools $ 7,000

SUBTOTAL: UNADJUSTED WORKER ACCESSORIES $ 8,509

Scaling factor adjustment $ -

SUBTOTAL: ADJUSTED WORKER ACCESSORIES $ 8,509

AVERAGE REPLACEMENT LIFE (YEARS) 4

AVERAGE ANNNUAL REPLACEMENT COST $ 2,127

Screenshot 29. Crew Accessories worksheet.
LamLum: A Tool for Evaluating the Financial Feasibility of Laminated Lumber Plants

33

Screenshot 30. First 5 of 20 years of summary costs from Administration worksheet. 

 —————————— Year —————————————

SUMMARY ADMINISTRATION COSTS 2007 2008 2009 2010 2011

Fixed yearly salaries (268,490) (276,485) (356,791) (367,420) (378,368) 

Clerical wages (63,967) (65,856) (101,703) (138,156) (142,241) 

Payroll & other clerical expenses (1,030) (1,061) (1,093) (1,126) (1,159) 

Other professional fees (4,120) (4,244) (4,371) (4,502) (4,637) 

Yearly communications expense (10,012) (10,312) (11,146) (11,480) (11,825) 

Other overheads (38,810) (39,975) (41,174) (42,409) (43,681) 

TOTAL $ (386,429) $ (397,932) $ (516,277) $ (565,093) $ (581,912)

Screenshot 30. First 5 of 20 years of summary costs from Administration worksheet.

Screenshot 31. First 6 of 20 years of working capital calculations from Working Capital worksheet. 

WORKING CAPITAL CALCULATIONS

 ———————————————— Year —————————————————————

2006 2007 2008 2009 2010 2011

Working capital required

Gross working capital realized (required) $ (1,703,148) $ (2,455,379) $ (3,250,881) $ (3,348,408) $ (3,448,860) $ (3,552,326)

Marginal working capital realized (required) $ (1,703,148) $ (752,231) $ (795,503) $ (97,526) $ (100,452) $ (103,466)

Terminal working capital value

Financing

Net new borrowing (principal repayment) 681,259 300,892 318,201 39,011 40,181 41,386 

Bank financing charges (6,813) (3,009) (3,182) (390) (402) (414) 

Total loan interest payment - (68,126) (98,215) (130,035) (133,936) (137,954) 

Loan principal balloon repayment

Subtotal: net financing cash flows $ 674,446 $ 229,758 $ 216,804 $ (91,415) $ (94,157) $ (96,982)

Net marginal working capital realized (required) $ (1,028,701) $ (522,474) $ (578,699) $ (188,941) $ (194,609) $ (200,448)

Screenshot 31. First 6 of 20 years of working capital calculations from Working Capital worksheet.