244 FINANCIAL ASPECT OF AFFORESTATION 



(3) No data are provided which are in any way comparable 



with the ordinary methods of estimating the value of 

 agricultural land. 



(4) The rate of interest yielded varies whenever the cost 



of planting or the value of the land varies, and thus, 

 in each individual case, it is necessary to refer to tables 

 before the rate of interest can be ascertained. 



(5) And since, cceteris paribus, the interest varies along 



with the original outlay, it raises the presumption 



that, even in the case of the same species of tree, the 



annual income receivable is re-invested at different 



rates of interest, whenever the initial outlay differs. 



Statement on the Yearly Rental Principle. By far the 



best method of presenting a financial statement of the profits 



likely to be realised by an investment in afforestation, is to 



state the equivalent yearly rental that could be obtained if 



the profits or net credit sum at the end of the rotation were 



discounted into a yearly payment. 



The yearly rental thus obtained from areas under even- 

 aged high forest represents the yearly interest yielded upon 

 the cost price of the land, and also upon the capital invested 

 in planting and establishing the crop. 



In order, however, to admit of these rentals being 

 directly compared with existing agricultural rents, it is 

 necessary to make a further deduction, representing the 

 yearly interest on the extra capital spent on planting. After 

 such deduction has been made, the remaining sum will be 

 equal to the "land rental" which will be obtained. 



The advisability or not of afforestation can thus generally 

 be seen from a comparison of these " land rentals " with the 

 existing rents obtained under agriculture, provided always 

 that there be no appreciation or depreciation in the price 

 per foot of timber. There may, however, be special reasons 

 for afforestation when direct profits are not looked for, as 

 for example, the planting of water catchment areas. 



Now, in order to find the net annual rental that any 

 even-aged high forest crop will yield, the credit sum at the 

 end of the rotation is found in the same way as already 

 described when finding the rate of compound interest yielded, 



