s today, and since he can reinvest his income in the same
business, it is reasonable to figure at a compound rate. A few
examples are given to show how similar calculations may be made
with any set of investment and stumpage factors which appeal to
individual judgment. The second table, prepared from the first,
shows at a glance the price that must be received for Douglas fir
to make it pay either 5 or 6 per cent compound interest under a
range of sixty different conditions of original investment and
annual cost.

It should be borne in mind that, although present land value is
made a charge, the value of the land at the time of harvest is
not considered. This value is certain to increase greatly in the
long periods involved. Taxation charges will be against it as well
as against the timber. Indeed much land is now held without any
regard to possible second growth. It should be assumed therefore
that any profit in forest investment shown will be _increased_ by
the sum obtainable for the land at the end of the same period.

Cost per M of growing Cost per M of growing
Douglas fir resulting Douglas fir resulting
from every $1 per acre from every 1 cent per acre
originally invested. of annual carrying charge.
--------At the end of--------- --------At the end of---------
50 60 70 80 50 60 70 80
Years. Years. Years. Years. Years. Years. Years. Years.
At 4% $ .35 $ .30 $ .33 $ .41 $ .074 $ .068 $ .078 $ .098
At 5% .56 .53 .65 .88 .102 .101 .126 .172
At 6% .90 .94 1.27 1.87 .142 .152 .208 .309

Example 1: With land worth $2.50 an acre at present, and an estimated
carrying charge of 3 cents a year for protection and 20 cents per
taxes, what stumpage price for a 50-year crop will pay 5 per cent
compound interest? 6 per cent?

5% 6%
2-1/2 X .56 = $1.40 2-1/2 X .90 = $2.25
23 X .102 = 2.35 23 X .142 = 3.27
----- -----
$3.75 $5.52

Example 2: With land worth $5 an acre at present, and stumpage
estimated to reach $7.00 in 60 years, what is the maximum annual
carrying charge per acre which can be paid during this period and
permit a 5 per cent return? A 6 per cent return?

5%