WHAT IS PROFIT 75 



The yearly profit is $20,000 — $12,500 or $7,500, or expressed 

 in per cent it is 8% — 5% or 7,% ; and expressed as a total it is 

 $400,000 — $250,000 or $150,000 which may he stated as: 



profit = Fe — Fc. 



That the same reasoning applies to land which is to be used for 

 forest is evident and leads to the statement: Profit = Se — Sc. 



3. Profit from a forest not producing regular yearly income. 



Usual case: A tract of 40 acres of timber is bought at $5,000, the 

 owner is not ready to cut the timber, it is not to be sold, or else no 

 oflfer is made ; in many cases of this kind in the more remote districts, 

 it might be impossible at times to get a buyer even at half the real 

 value of the timber: there is neither loss nor profit here actually es- 

 taiblished until the timber is cut or some sale is made. As a fore- 

 cast, however, it may be possible and worth while to work out an 

 expectation value in the manner outlined before, and then the prob- 

 able or expected profit is equal to the expectation value of this 40 

 acres minus the cost value, in this case $5,000. 



From the foregoing illustration, it is evident that the term profit 

 is clear and that it is consistently employed in the ordinary store, and 

 in ordinary sale of property. Rut when employed in connection 

 with the regular income from a house, farm or forest, factory, etc., 

 it is not clear, being confused, commonly, with gross, or net incomes 

 and largely loses its usefulness. 



B. INTEREST MADE BY THE FOREST. 



In forestry the question frequently comes up — what rate of in- 

 terest is made by the growth of timber on a given tract. Three 

 cases may be distinguished : 



a. The growth of a single stand such as a 40-acre stand of 

 even aged timber. 



b. The growth of a regulated forest, or more precisely, of a 

 working section with perfect age class conditions. 



c. The growth of timber which may be produced on an area 

 of land which is bare to start with. 



I. The interest made by a single even aged stand of timber. 



Here the usual case considers the growth for only a short period, 

 say 10 years, but frequently, however, it demands the interest made 

 by the growth for an entire rotation. 



