A WHITE PINE PROBLEM (MINNESOTA.) 



PREMISES : A Minnesota lumberman owns 10,000 acres of 

 white pine forest, containing 6000 feet b. m. per acre, worth $3 per 

 thousand. The agricultural value of the land is $5 per acre, when 

 the timber is removed. Under conservative lumbering, an annual 

 production of 300 feetb. m. per acre can be expected. Taxes Sets per 

 acre per annum. Protection from fire, under forestry, I2cts per acre per 

 annum. Extra logging expenses, under forestry, $4 per acre, at 

 the first cutting. Lumber prices expected to double in 35 years 

 (=: annual rise of 2 per cent.) Proper growing stock for forestry 

 2000 feet b. m. per acre. 



QUESTION : What interest on the investment will forestry 

 yield P 



POINTS : 



1. The investment, to begin with, is 6000 feet b. m. worth 

 $3 = $18 per acre plus value of soil worth $5 per acre. 



2. The yield under forestry is 4000 feet worth $3 = $12 per 

 acre to be derived at once, and 300 feet worth poets to be derived 

 annually thereafter, being the annual production of the 2000 feet left 

 standing, per acre. The future yields are to be discounted at (X 

 per cent. — 2 per cent.) 



3. The annual expenses, under forestry, are 20 cents. The 

 extraordinary expenses are $4 per acre, spent at the first cutting. 



EQUATION: 18 -L5 = »+ ^^j^_^^^ --^-4 

 RESULT: About 7 per cent. 



»7 



