A LONGLEAF PINE PROBLEM (FLORIDA). 



PREMISES : Mr. S., of E., Florida, owns a pine forest of all 

 ages, so that seedlings, saplings, poles and trees are equally mixed, 

 and estimates that the annual growth is 250 feet board measure per 

 acre. The tract is 100,000 acres and he thus cuts 25,000,000 feet 

 board measure annually with the view of not decreasing the growing 

 stock. The expense for taxes and the cost of protection from fire, 

 etc., is 5c per acre per annum ; the value of the stumpage is $1 per 

 thousand feet board measure. Mr. S. thinks that the quality of the 

 forest will be improved gradually, and expects an increase in pro- 

 ductiveness, of one per cent, annually. He figures, besides, on ris- 

 ing stumpage prices, the rise keeping step with the increase in pop- 

 ulation (i^ per cent.). He has a chance to invest money at S per 

 cent, in an equally safe manfler and wants to sell the forest. 



QUESTION : Below what price per acre is it not advisable 

 for Mr. S. to sell ? 



POINTS : 



1. Mr. S. must figure at 5 per cent, interest, as the equally 

 safe investment promises him 5 per cent, as well. 



2. If the productiveness of the forest increases by l per cent, 

 per annum, and the stumpage price at i^ per cent, per annum, the 

 receipts will grow at the rate of 2>^ per cent, per annum. In dis- 

 counting these receipts backwards, we have to figure at 5 per cent. 

 —2%. per cent. = 2% per cent. 



3. The present value of all-annual receipts is $25,000 



0.050—0.025 



4. The present value of all expenses (taxes and protection) is 

 100,000 X 0.05 



0.05 



EQUATION : 25,000 100,000 x 0.05 ^ 



0.050 — 0.025 0.05 



RESULT : $900,000 for the whole forest, or $9 per acre. 



