INVESTMENTS AND COSTS IN FOREST PRODUCTION 77 



Group C. 



Annual or current expenses for 

 Protection. 

 Administration. 

 Taxes. 

 Maintenance of permanent improvements. 



105. Calculation of Total or Final Costs. To compute the 

 total final cost, with interest included, at the end of a given 

 period, the items under each of these three classes may be 

 totalled. 



The "cost" of each is the amount which should be charged 

 against the resulting income, which in forestry is the stumpage 

 value of the timber plus the revenue from other sources. 



In Group] A, the original capital, if maintained properly, re- 

 mains intact at the end, and only the interest can be charged as 

 an expense to the crop. Let S c = cost of soil and permanent 

 improvements. Then total cost is 



S e (!.<#")-. (87, Illb) 



In Group B, only those crop expenses which occur in the same 

 year may be computed as one total. These expenses must 

 eventually be met entirely from income and do not constitute 

 capital expenditures. With the cutting of the timber, no por- 

 tion of the remaining assets are available from which to return 

 these costs. 



The total cost of all such items is found by Formula I in which 

 C = initial investment, 

 C (i.op n ) = cost at end of period. 



Expenses incurred in year d will cost 



Q(i.o^-<0. 



Let C , C d , C e , C f = Initial expenses incurred in the beginning 

 and in the years d, e and /. The sum of these costs is 



C (i.ctf) + C d (i.op~ d ) + C e (i.op- e ) + C, (i.o^-O- 

 In Group C, all annual expenses are totalled. The sum of this 

 expense with interest is found by Formula Illb ( 87). 

 Substitute e for r to represent annual expense. 



