APPENDIX I 7 1 



37. A lumber company bought 30 thousand acres of timber 

 lands; which cut 12 M. per acre; no net growth ; they paid $10 an 

 acre, build a saw mill, planing mill and other buildings at a cost of 

 $150,000, and buy logging equipment at $50,000 more. They log 

 for $6 and mill for $4 which includes all expenses. They get S18 

 per M. feet on board car at mill; cut 20 million per year. Taxes on 

 5^ value at ID per 1,000, interest at 5% ; depreciation and replace- 

 ment as follows : 



None for buildings, the repairs are paid by milling costs. 



All machinery is replaced once during the entire cut. Buildings 

 cost new $60,000 and are worth at end $10,000. Machinery at start 

 $90,000, at end $10,000. The logging outfit is kept up by logging 

 charge of $6. 



a. What is the yearly depreciation on buildings? What on 

 machinery ? 



b. What does the 20 million feet lumber cost them and what 

 is their net income per year? 



c. What is the expectation value of the whole enterprise at 

 start and after 7 years cut ? 



d. If a fire reduces their forest by 5 years cutting what is the 

 damage to the company? 



