84 FOREST VALUATION 



income is received. This payment must be regarded as can- 

 celling the additional capital invested since the last payment. 



Where yields are irregular in time and value, and yet there 

 always remains a considerable stand of timber on the ground, 

 the relation between cost and income becomes a matter of judg- 

 ment or adjustment. The object should be to insure the return 

 of the capital invested in the timber which is removed, and carry 

 as a cost or further investment only a reasonable balance of 

 original cost against future income. The cost of a forest is the 

 sum of the net costs of the separate stands or parcels. 



109. Cost of Producing a Normal Forest. A normal forest 

 is one from which an annual income may be obtained without 

 diminishing the amount and value of the capital or assets. This 

 requires the presence of equal productive areas in each age class. 



Granting that the cost of each parcel of land is charged to 

 this forest in the year in which the crop upon it is started, and 

 that it takes n years to establish the forest, an area equal to 



- of the whole must be reproduced each year. The total annual 

 n 



expense e applies to the entire area of the forest. C is required 

 to plant the parcel. The capital tied up in the investment 

 for the year will then be C + S c + E ( 105). 



Since an equal area and capital investment is added each year, 

 on which interest accumulates till the year n, the sum of costs 

 forms a series, with (C + S c + E) as the first term and i.op 

 as the ratio of increase. See Formula III. 



The sum of these costs is 



o.op 



But the capital E is fictitious ( 104) and this has been intro- 

 duced n times. In the same way, S e may be deducted as a 

 capital asset, totalling nS c . 



This makes the net cost of production for the timber alone as 



(A,) 



