114 FOREST RF.C.UI.ATIOX 



amount of material and values we can produce from this acre and 

 the cost of doing it. 



The calculation usually employed is based on the following 

 general formula of the present value of a series of rentals coming 

 at regular intervals, and continuing indefinitely as does rent from 



land. 



■p 



=^ Rental Value or Income \"alue of the Land where 



I. op" — ] 



R is the rental, i. e., the net income which can be produced every 

 forty, sixty, etc., years, i. e., every Rotation. 



p is the rate of interest. 



n is the number of years to grow the crop, here then the age at 

 which the stand is cut, i. e., the Rotation. 



To illustrate : 



Tf cut at sixty years, and the total net income at sixty years 

 will he $500; and if i .03"'' = 5.89, the interest rate being 3%, the 

 calculation then is 500/5.89 — i = 500/4.89 = $102 approximately. 

 According to calculation, this acre of land brings enough rental to 

 make it worth about $102 if used for the purpose of growing the 

 special kind of timber and cutting it at the age of sixty years, pro- 

 viding we are satisfied with 3% on the money spent in planting and 

 all other expenses.' 



A great deal of controversy has taken place over the last two 

 forms of Rotation, and German foresters are still largely divided into 

 two camps on this question. The tendency is toward a full recog- 

 nition of the value of financial Rotation with a compromise justify- 

 ing a larger income with a smaller interest rate or net rental on the 



' The proper formula to employ in this calculation is the formula for 

 Se, or the Income Value, or Expectation Value of the Soil. This formula in 

 its usual form reads : 



Yr J- Ta d.op'-a) -\- Tb (i.op>--b) _ C dop' ) 



Se = — — E 



I. op"" — I 



where Se is Expectation Value or Income Value of the Soil, or land per acre. 

 Yr is Stumpage Value of one acre of timber t years old. (Ripe timber.) 

 Ta is thinning made when the stand is a years old. 

 Tb, thinning when stand is b years old, 



C is cost of planting or establishing the young stand of timber on one acre 

 E, yearly expenses, protection, taxes, administration capitalized at p%. 

 p is interest rate used, usually 3%. 



