ANOTHER SPRUCE PROBLEM. 



PREMISES: A lumberman owns 20,000 acres of spruce land, 

 from which he has just cut 6000 feet board measure per acre, 12 

 inch and over in diameter at the stump, worth $1.50 per thousand. 

 After another 20 years he will be able to obtain 3320 feet per acre, 

 cutting again down to 12 inch diameter, and we may expect, that, 

 after 40 years, the same yield will be obtainable and so on. 



The land, when cleared, is said to have some value for pasture 

 purposes. The taxes are 4cts., the expense for administration, pro- 

 tection, etc., 8 cts. per acre per annum. Figure at 6 per cent. 



QUESTION : What is the forest worth at the present mo- 

 ment? 



POINTS: 



1. After 20, 40, 60 (and so on) years, a yield of 3320 feet b. m., 

 worth $4.98 can be obtained. 



2. The necessary expenses are 4 cents plus 8 cents per acre 

 per annum. 



3. The value of a forest, like the value of a house or a farm or 

 a business is equal to the present value of all returns, minus all ex- 

 penses, expected from it. 



EQUATION: X= ,^fcr -^ =2.22 - 2.00 



RESULT : The forest, after lumbering, is worth 22cts per acre. 



If the owner can sell it, for farming purposes, at over 22cts. per 

 acre, he should certainly d6 it, provided that he can make, by re- 

 investing the proceeds of the sale, 6 per cent, in an equally safe 

 manner. 



If the taxes, or the expense necessary for administration, pro- 

 tection, etc., are 2cts higher per acre per annum than is supposed in 

 the premises, the owner had better give up the land after the first 

 cutting, unless he can sell it, for in that case its forestry value is 

 negative, the necessary expenses devouring all possible profits. 



If, on the other hand, there is a good chance for the stumpage 

 prices to rise, say at the average rate of 2 per cent, per annum, the 

 cut over forest has a value of 



4.98 0.12 . 



j:6^=-r~ "5:56 = *^-'s ?««■ »"«• 



The study of future prices of stumpage is of the very greatest 

 importance for the wood-owner. 



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