Impacts over time

Hi Susan, We are not really sure what to recommend based on what is posted below. As we see it, the answer depends on whether the investment is creating new operations in year two or sustaining the operations of year one. We're hoping with a little more information we may be able to provide a more complete answer. Here are some initial thoughts/questions. [ul] [li]Is the investment in a different business/project or the same one? [/li] [li]If the same one, why does it need continued investment - is it expanding? [/li] [li]If it is not expanding an existing business/project or starting a new one, but just sustaining an existing one, then we wouldn't necessarily count the wages or output either. [/li] [li]How are you modeling the investment - this operational investment or in a construction sector?[/li] [li]Construction jobs are rarely counted each year as movement from one-site to the next sustains the same job over multiple years.[/li] [/ul] Thanks for the question and any additional clarification you can provide. --Implan Support Staff

Ok, for example's sake let's say that about $15.5 million would be invested each year for 2 years into the oil and gas industry. In the first year, that $15.5 million would result in $26.2M of total output, $4.2M of total earnings and a total of 105 jobs. In the second year, we would invest an additional $15.5 million in a new project in the oil and gas industry, creating an additional total output of $26.2M, etc. But the business created as a result of the first years investment would still be chugging along and those jobs and earnings would still be an effect of the initial investment. So it would seem to me that in year two, we would have the $26.2M of total output, $4.2M of total earnings and 105 jobs from that years investment, plus the indirect/ induced output, earnings and jobs created in year one, for a year two total effect of $36.9M million in output ($26.6 total from Y2 plus the induced $10.7M from year one). Under that assumption, the total effect of the two years of investment would be $63.1M (26.2 total ooutput in year 1, plus the 36.9M of output in year 2. I would appreciate any comments or thoughts on my thought process and calculations. Thanks

Hi Susan, 50 years is a longer construction cycle than we are really familiar with, but here are our thoughts. It appears from your description that that the company will reinvest after tax and after dividend profits (ie, retained earnings) of $17 million a year over a 50 year period. This implies a very large operation and assuming that the entire retained earnings is reinvested locally is normally a heroic assumption. Even if the region is the US, there might be overseas investments, so you may want to be cautious regarding this; however, you certainly know more about the way the company is investing than we will. If you can show, that $17 million in constant dollars can be spent creating new establishments producing $33 million each year over 50 years, then you are correct, the impact of year 1 will look like similar impacts over the remaining 49 years in constant dollars. The operation Output would actually be cumulative in constant dollars – that is new operations will be $33 million in year 1, $66 million in year 2, etc. And this is only the operational impacts of the investment. $17 million plus borrowings worth of planning, administration, new structures and equipment each year would have its own impacts. One caution, getting $2 of Output per every dollar of investment sounds like extremely high returns – I would have to assume that the $17 million of reinvestment is leveraged with borrowing and paid back through the operations of the new establishment. Finally, in year 2, the only “new impact” would be the $26.2M of total Output, $4.2M of total earnings and 105 total jobs – same as in year 1 (except adjusted for inflation). The Output and income in year 2 of the year 1 investment would be “new” that year (more technically, “sustained” from the previous year) but the jobs would not be. Hope this helps. --Implan Support Staff