A Word About the Output 



The computer output for the seven prob- 

 lems is shown in figures 14-20. Note that all 

 the input is printed on the output. Control 

 cards 6 and 7, and 1 1 when used, are labeled 

 along with the information they contain. This 

 is to facilitate the search for errors in input 

 should any occur. Thus, when KX (control 

 card 7) is greater than 0, product evaluations 

 are to be made. If KX is and product control 

 cards are included in the problem, an error 

 message results and the computer aborts the 

 problem. 



When KCXX (control card 7) is greater than 

 0, periodic costs and incomes are read. The 

 number under each of the six KCX's indicates 

 the number of periodic costs and incomes 

 included in each of the six alternatives or 

 plans that can be read simultaneously. 



When JXX (control card 7) is greater than 

 0, annual costs and incomes are read. The 

 number under each of the six JX's indicates 

 the number of annual costs and incomes to be 

 read in each of the six possible alternatives or 

 plans. 



When NZZ is greater than (it will be 

 either or 1), at least one of the alternatives 

 or plans is to be treated as a terminated series. 

 A or 1 under the JX's indicates how each of 

 the six possible alternatives or plans is to be 

 evaluated: 



= perpetual series 

 . 1 = terminated series 



The 1ST is used only with program options 

 2 and 3 to indicate which evaluation is to be 

 made. It is coded 1 on the first card set, and 2 

 on the second. 



When KX is greater than 0, MX (control 

 card 7) must also be greater than 0. MX indi- 

 cates the number of price assumptions to be 

 read. If MX is 2, there must be two cards of 

 card type 1 3. 



General option output. — The internal rate 

 of return and present discounted net worth 



are given for the range of interest rates speci- 

 fied on control card 6. 



Stand replacement option. — The output for 

 this option first gives present discounted net 

 worth for the future timber growing oppor- 

 tunity for the range of interest rates specified. 

 Internal rate of return can be read from this. 

 For problem 4, it is between 5.6 and 5.7 per- 

 cent. For problem 5, it is between 4.8 and 4.9 

 percent for alternative or plan 1 and between 



7.4 and 7.5 percent for alternative or plan 2. 



Second, the output gives present discounted 

 net worth for the future timber growing plan 

 and present stand conversion plan combined. 

 In interpreting this information, the user must 

 specify the minimum acceptable return. If a 



3.5 percent return is acceptable, in the case of 

 problem 4 the manager would be financially 

 ahead (present discounted net worth is greater) 

 to hold the stand for another 10 years because 

 present worth is greater under this plan. In the 

 case of problem 5, if 3.6 percent return was 

 acceptable it would be financially advanta- 

 geous to cut the poor stand on the better land. 



TSI option. — The output for this option 

 includes the present discounted net worth for 

 the two TSI plans compared under each of the 

 six possible alternatives or plan comparisons. 

 In addition it gives the present discounted net 

 worth due to the difference between the plans 

 compared. In the case of thinning compared 

 with no cultural work, the internal rate of 

 return for the thinning investment is between 

 5.2 and 5.3 percent. In the case of a program 

 of thinning and pruning, internal rate of return 

 on investment is between 4.5 and 4.6 percent 

 indicating that pruning only lessened the fi- 

 nancial opportunity. 



Problem 7. It is obvious from this analysis 

 that there is no financial advantage in leaving 

 seed trees (plan 1). The calculations suggest 

 the manager should evaluate closely seed pro- 

 duction on the area prior to cutting. For 

 obvious reasons he could not wait to see what 

 the seed crop was likely to be before planning 

 for future timber growing. However, financing 

 for timber growing could be planned on the 

 basis of plan 4 or plan 2. 



44 



