FOREST MANAGEMENT WORKSHOP MANUAL
VALUE OF WOODLAND
T.R. Farmer paid $200.00 per acre for 500 acres of woodland.
He figures his interest on investment as follows:
Initial investment $200.00 x 500 acres (Land and Timber) = $100,000
Average annual increase in value expected 8% on market value
of $100,000 = +8,000
Production of 100 board feet sawtimber per acre per year worth
$30.00 per Mbf stumpage = +1,500
Annual rental of hunting rights to Green County Sportman's Club = +1,000
Annual recreational and aesthetic value to the Farmer family = + 300
Property Taxes = - 700
T. R. Farmer's supervisory time 80 hours per year x $4 per hour = - 320
Annual TSI of 25 acres at $40 per acre less $30 FIP Cost-Share = - 250
Annual net worth increase or 9.5% on his original investment = $9,530
- If T. R. Farmer must pay his local banker 9.5% on money
borrowed to buy the tract, then he will break even.
- If T. R. Farmer has a savings account of $100,000 on which
he was drawing 6% interest from his local savings and loan, then
he obtains an extra 3.5% on his savings by investing it in
- If T. R. Farmer feels he must obtain 12% interest before the
investment will be worthwhile, then he cannot afford to pay more
than $74,417 for the 500 acres and the $100,000 price tag makes
it too expensive for him.
$9,530.00/.12 = $74,417
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Last revised September 3, 1995.
Please send comments to: Duane Bristow (firstname.lastname@example.org)