14 Forestry Quarterly 



ring expenses. The following tables aim to show for quite a 

 wide range of yields and stumpage prices what will be the net 

 profit and corresponding compound interest rate on a number of 

 different initial investments. The annually recurring expenses 

 are difficult to figure satisfactorily, but it is thought are liberally 

 provided for by allowing for administration and taxes 1 per cent, 

 annually on the value of the land plus 5 cents per acre annually, 

 both compounded at 6 per cent. 



These tables should be helpful in rough determinations, in 

 particular cases, of the advisability of forestry and the financial 

 rotation — the one which will yield the highest rate of interest. 

 They indicate at once under what conditions forestry is advis- 

 able and are, of course, incomplete, but it is hoped to elaborate 

 them to a considerable extent in the future. They also indicate 

 the relative advisability of a policy of spending considerable 

 money on cost of formation with expectation of getting large 

 yields, as opposed to being content with small yields from stands 

 established at slight cost. 



The calculations are given only for yields and values which 

 will pay 3 per cent, or more, compound interest. The initial 

 investments given may be considered as roughly applicable to a 

 large number of combinations of cost of land and cost of forma- 

 tion, which, when added together, will give the same totals as 

 any of those represented in the tables. For instance, it has been 

 found that, for a given yield at any age and for equal stumpage 

 prices, the compound interest rate on the original investment will 

 be about the same whether it consisted in $10 for land plus 

 $5 for formation, or $5 for land plus $10 for formation. Thus 

 with a yield of 5,000 board feet per acre and a stumpage value of 

 $10 per thousand at the age of 25 years, the interest rate is 5.1 

 per cent, in the first case and 4.9 per cent, in the second. 



Interest rates for values not shown in the tables can be obtained 

 by interpolation or curving. Thus, other factors being equal, 

 the rate for a stand in which the initial investment is $12 would 

 be between the rates for $10 and $15 investments. By plotting 

 the values for $5, $10, $15 and $20 investments, using the quan- 

 tities of capital invested as abscissas and the rates of interest 

 as ordinates, a curve can be drawn which when read at the $12 

 value will indicate the corresponding rate of interest. 



