Module 5.1 to 5.2

Question 1

What is the 2 basic capital of any forest enterprise?

Answer 1

1. Timber stand

2. Land

Question 2

Valuation of land and timber is a large concern because investments are ____, relatively ____, and entail in ___ the many responsibilities of _____

Answer 2

heavy, permanent, full, land ownership

Question 3

The ____ nature of timberland investments makes ____ and _____ of appraisal techniques particularly important

Answer 3

long-range, careful, searching application

Question 4

2 Ways of Valuating Forest Land and Timber Stand

Answer 4

1. Timberland market values

2. Foreas areas on a permanent timber growing basis

Question 5

Based almost entirely on the conversion value of the timber stand currently in the existence upon the land. With little or no regard for the possibilities of continued production of forest crops.

Answer 5

Timberland market values

Question 6

As forest areas are placed on a permanent timber-growing basis, timberland will be ____ valued, bought, and sold on the basis of their ____ rather than on the value of ____ as stumpage for conversion

Answer 6

increasingly, productive capacity, currently standing timber

Question 7

The application of _____ based on land productivity is important for the establishment of ____ for sound forest investment.

Answer 7

sound valuation methods, market prices

Question 8

One enduring resource of a permanent forest business

Answer 8

Land

Question 9

Value of land for forest uses is derived from the _____ or _____ it can ____

Answer 9

Forest crops, other services, produce

Question 10

4 controlling factors of forest land value

Answer 10

1. Site quality
2. Kind and intensity of management practiced including its costs
3. Value of the product
4. Effect of time interval involved as measured by the rate of interest employed

Question 11

Inherent vigor of the site that measures the potential productivity of the forest.

Answer 11

Site quality

Question 12

Site quality remains approximately _______ irrespective of the ____, _____, or ____ of the timber stand currently occupying the area, except when _____ have caused soil erosion, impoverishment, or development of undesirable soil texture or structure

Answer 12

constant, character, condition, quality, land-use

Question 13

Influences the volume and quality of timber actually produced

Answer 13

Kind and Intensity of Management Practices

Question 14

3 properties that can be controlled by silvicultural practices

Answer 14

1. Degree of promptness of regeneration
2. Species composition
3. Stocking and growth

Question 15

A given site may produce crops ranging from practically ___ to all of those approaching its ____

Answer 15

none, biological potential

Question 16

The cost of _____ must be considered in relation to their _____.

Answer 16

Forest practices, Efficacy

Question 17

Entails not only an estimate of what the products will bring in the market but also the cost of getting the products off the market

Answer 17

Value of the product

Question 18

______ are often of controlling importance in determining the value of the timber crop as it stands in the forest

Answer 18

Accessibility factors

Question 19

Determines what rate of interest should be employed in bringing the various costs and income elements, incurred and received at widely differing times to a common point in time

Answer 19

Effect of time interval involved

Question 20

Growing timber takes time and usually a lot of time in relation to the ___ of most productive processes within the range of business experience

Answer 20

length

Question 21

Growing of timber takes time and usually a lot of time in relation to the ___ of most productive processes within the range of business experience

Answer 21

length

Question 22

Public owners have a relatively ___ time preference, indicating the use of a fairly ___ interest rate in considering public undertakings

Answer 22

low, low

Question 23

Individual owners who must operate in full exposure to competitive business pressures, have a ____ time preference and can be expected to apply a rate at least as ___ as the ___ rate for alternative investments

Answer 23

Higher, high, going

Question 24

In estimating forest land value for even-aged forest, direct estimate is to start with a ____, and visualize _____ of a forest stand upon it

Answer 24

Price of bare land, Establishment

Question 25

A stand is grown to maturity, harvested, and the process started over again with no _____ to the series of income.

Answer 25

Termination date

Question 26

A particular plot soil yields a crop at _____ intervals only

Answer 26

periodic

Question 27

The various elements of cost and income pertinent to a particular plan of mgt must all be brought to a common point in time so that net income can be determined and capitalized. What is the common point in time?

Answer 27

Rotation age

Question 28

Soil expectation value capitalizes the _____ value once every 30 years.

Answer 28

rotation age value

Question 29

Significance of forest land values

Answer 29

Se estimation includes all the factors affecting land values

Question 30

What are the 4 factors affecting land values?

Answer 30

1. Site quality
2. Cost of management
3. Market and accessibility factors
4. Time element

Question 31

What are the practical implications of SE

Answer 31

1. Se values are extremely sensitive in the rate of interest employed
2. Se calculation focuses attention on the costs and return of building up of a forest on bare land
3. Se values give a useful guide to the desirable length of the rotation
4. The ground level of Se values in a forest area is of broad regional significance

Question 32

If Se values are used as a measure of rotations, the nature of the capitalization process ____
capitalized value when the rate is ___ or vice versa

Answer 32

inflates, low

Question 33

At reasonable rates, it gives a good indication of the most profitable rotation

Answer 33

Soil Expectation

Question 34

Rotation of _____ Se values fall somewhere in between that indicated by the culmination of the ____ & by ____

Answer 34

highest, mean annual increment, max mean annual forest rent

Question 35

Brings out clearly whether a forest once destroyed can be rebuilt on anything approaching a private business basis

Answer 35

Soil expectation

Question 36

Value of timber stand is subject to ____ as the stand grows; in contrast to ___ since ____ does not grow

Answer 36

current change, land value, land

Question 37

2 values that represent the maturity of timber

Answer 37

1. Market value of the standing timber for immediate conversion,
2. Whatever residual land value

Question 38

3 General Approaches to Valuation of Timber Stand

Answer 38

1. Current market value
2. Cost value
3. Income values

Question 39

Estimation of future returns; estimating present net worth of all future incomes (less costs) that reasonably maybe expected

Answer 39

Income values

Question 40

Is a matter of looking backward to the answer to what has been harvested.

Answer 40

Cost value

Question 41

2 reasons why cost value is a natural approach

Answer 41

1. It measures the degree of success or failure of the investment made
2. It is an important basis in the event of damage when question of loss incurred is faced

Question 42

Based on comparable timber stand. In places where forest production is done by private individuals, there are areas where market prices are fairly established

Answer 42

Current market value

Question 43

Determination of cost and income values for even-aged stands following logically from those used in _____ except that the focus is on the ____, and either ___ or _____ land values are used

Answer 43

land value determination, stand, actual, assumed

Question 44

Estimate for a stand of given age, the net present worth; at some assumed rate of interest of all past expenditures

Answer 44

Cost value

Question 45

In cost value, income during the period be naturally _____

Answer 45

deducted

Question 46

In cost value, ____ need to be included and logically it should be what the land ____

Answer 46

land value, actually cost

Question 47

In calculating cost value only, the Se value ___ be determined separately since we have
excluded ___ in the determination of cost value.

Answer 47

cannot, future income

Question 48

Se value determination requires that all ___ and _____ within the _____ be considered.

Answer 48

cost, revenue, rotation period

Question 49

Income value is determined according to the same general procedure except that the viewpoint is ____ and only ____ and ___ are included instead of past cost and income.

Answer 49

forwarded, future incomes, expected costs

Question 50

In income valuation, ____ land value at the end of the rotation is assumed

Answer 50

Arbitrary

Question 51

The income value is a _____ value

Answer 51

Discounted

Question 52

As an alternative, each item could have been ____ discounted instead of carrying them all to the end of the rotation.

Answer 52

individually

Question 53

As an alternative, land value can logically be estimated ____ from the timber value, since such a value would ____ at the ___ of the rotation when the major crop is harvested.

Answer 53

separately, reappear, end

Question 54

As an alternative, the bare land could presumably be ___ as such and becomes an element of ___ to consider in exactly the same way as an _____ value

Answer 54

sold, future value, expected future timber

Question 55

Cost vs. Expectation Values

Answer 55

1. Cost considers what has happened

2. Expectation value considers what is expected to happen

Question 56

The one element common to both income and cost value.

Answer 56

Land value

Question 57

Cost or income value for a timber stand can only be calculated when there is a _____ on the ground.

Answer 57

Timber stand

Question 58

Cost value cannot be determined in an ____ since the stand is never developed directly on bare land.

Answer 58

uneven-aged stand

Question 59

In uneven-aged stands, the land value never exists separately from timber value unless the forest is ____.

Answer 59

Destroyed

Question 60

In an even-aged stand, the common forestry business situation is that a forest is organized for
_____ yield. Income in more or less ___ amounts are received each ____ and ___ are currently paid. The difference represents the yearly _____ or ____ as the case may be.

Answer 60

sustainable, equal, year, expenses, operating profit, loss

Question 61

Timber in unprocessed form as it is found in the woods, most frequently, standing timber whether live or dead

Answer 61

Stumpage

Question 62

The term “stumpage” can also be applied to timber ____ in connection with right-of-way clearing as long as it is not cut up into logs and other merchantable units.

Answer 62

wind-thrown timber

Question 63

The raw material of the forest from which all woods are derived.

Answer 63

Stumpage

Question 64

The standing merchantable timber

Answer 64

Stumpage

Question 65

The value of the standing merchantable tree

Answer 65

Stumpage value

Question 66

Based on the present value of all future net incomes of a resource

Answer 66

Income valuation

Question 67

In income valuation, there is a need to ____ all of the _____ to the time when valuation is ____

Answer 67

discount, future incomes, done

Question 68

Can be used to value existing timber stand grown under even-aged or uneven-aged management

Answer 68

Income valuation

Question 69

In the income valuation of even-aged stands, the termination date of the stand is the ___ of the rotation

Answer 69

end

Question 70

Income valuation can be done at ___ age of the rotation

Answer 70

any

Question 71

Income valuation assume _____ at the end of rotation, considered as _____.

Answer 71

arbitrary land value, future income

Question 72

Can be applied to even-aged stands, including fruit tree plantations

Answer 72

Cost valuation

Question 73

Cost valuation _____ all costs incurred ___ time of valuation

Answer 73

compound, prior to