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Forests 2016, 7(7), 130; doi:10.3390/f7070130

Quantitative Analysis of Uncertainty in Financial Risk Assessment of Road Transportation of Wood in Uruguay

1
Department of Production Engineering, UNESP Univ Estadual Paulista, Itapeva 18409-010, Brazil
2
Department of Forestry, Facultad de Agronomia, Universidad de la República, Montevideo 12900, Uruguay
3
Department of Biostatistics, UNESP Univ Estadual Paulista, Botucatu 18618-689, Brazil
4
Department of Forest Sciences, UNESP Univ Estadual Paulista, Botucatu 18610-307, Brazil
*
Author to whom correspondence should be addressed.
Academic Editors: Thomas J. Straka and Eric J. Jokela
Received: 7 April 2016 / Revised: 11 June 2016 / Accepted: 18 June 2016 / Published: 27 June 2016
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Abstract

The uncertainty in road transportation of wood is inherent to its operational costs, to the amount of transported wood, to the traveled distance, to its revenue, and more. Although it is not possible to measure this uncertainty fully, it can be quantified by the investment risk, which is the probability and degree of financial loss. The objective of this study is to quantify the financial risk of the investment in wood transportation through Monte Carlo simulation, which uses realistic situations to estimate the operational cost of vehicles used for road transportation of wood. We quantify these uncertainties by assessing financial risk and building pseudorandom scenarios with the Monte Carlo simulation method, in addition to the Net Present Value techniques, the Modified Internal Rate of Return, and the Profitability Index, all commonly used in financial investment projects. The results show that the estimated operational costs are equivalent to the actual ones, along with the evidence that the cost of fuel, the driver’s manpower, and tires are components that mainly increase the degree of financial risk for an investment project in road transportation of wood. In contrast, optimizing the amount of transported wood and maximizing wood transportation cost have a significant and positive correlation with the volume of transported wood and the average price of wood transportation, leading to a reduction in the degree of financial risk. View Full-Text
Keywords: Monte Carlo; Eucalyptus species; transport costs; truck; wood mobilization; forest harvesting; cash flow; economic viability; Net Present Value Monte Carlo; Eucalyptus species; transport costs; truck; wood mobilization; forest harvesting; cash flow; economic viability; Net Present Value
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Simões, D.; Andrés Daniluk Mosquera, G.; Cristina Batistela, G.; Raimundo de Souza Passos, J.; Torres Fenner, P. Quantitative Analysis of Uncertainty in Financial Risk Assessment of Road Transportation of Wood in Uruguay. Forests 2016, 7, 130.

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