TABLE FOR DETERMINING PROFITS IN HOLDING 

 SECOND GROWTH 



By W. D. Sterrett 



An interesting business proposition which often confronts the 

 forester is the possible profits in purchasing and holding imma- 

 ture second growth which has promise of becoming merchantable 

 in 5, 10, 15, 20, or 25 years. At present such stands can often 

 be purchased at sufficiently low valuation to pay good profits 

 on becoming merchantable, and much higher than can be ex- 

 pected from establishing plantations which will not mature for 

 30 to 60 years.^ The attached table should prove useful in calcu- 

 lations of possible profits in holding second growth which can 

 be purchased at given prices per acre. 



In the table, under the column of total cost to date, is indi- 

 cated how much the stumpage would have to be worth per acre 

 in 5, 10, 15, 20, or 25 years in order to earn 6 per cent on 

 all money invested. If it is estimated, in a given case, that the 

 stumpage will be worth more than these amounts in a given 

 number of years, the investment would be a good one, as more 

 than 6 per cent would be secured from it. 



It is thought that the annual recurring expenses are liberally 

 provided for by allowing for taxes and administration (including 

 protection) one per cent annually on the initial investment in 

 land and trees plus 5 cents per acre annually, both compounded 

 at 6 per cent. As the total initial cost is subtracted, the future 

 value of the land after the timber is removed constitutes an 

 additional profit and can be reckoned upon accordingly. The 

 entire amount of initial investment is subtracted because it is 

 not possible to separate the value of the land from the value of 

 the growing stock of trees at time of purchase. 



This table is also applicable to holding of mature timber which 

 is increasing in yield or value per acre by allowing it to stand 

 for a given number of years. 



1 See "Table for Determining Profits in Forestry," F. Q. vol. XIII, p. 12. 

 472 



