In Table 12. 1, when r = 0. 02, the present value of the cost rises for 68 years and then subsequently declines. Why?

Table 12. 1

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TABLE 12.1 Economic Harvesting Decision: Douglas Fir 10 20 30 40 50 Age (years) Volume (cubic feet) Undiscounted (r= 0.0) 60 68 70 80 90 100 110 120 130 135 694 1,912 3,558 5,536 7,750 10,104 12,023 12,502 14,848 17,046 19,000 20,614 21,792 22,438 22,514 Value of Timber ($) 694 1,912 3,558 5,536 7,750 10,104 12,023 12,502 14,848 17,046 19,000 20,614 21,792 22,438 22,514 1,208 -514 1,574 2,067 2,661 3,325 4,031 4,607 4,751 5,454 6,114 6,700 7,184 7,538 7,731 7,754 338 1,491 2,875 4,425 6,073 7,416 7,751 9,394 10,932 12,300 13,430 14,254 14,707 14,760 Cost ($) Net Benefits ($) Discounted (r= 0.01) Value of Timber ($) Cost ($) Net Benefits ($) Discounted (r= 0.02) 628 1,567 2,640 3,718 4,712 1,188 1,470 1,792 2,115 2,414 -560 97 848 1,603 2,299 5,562 6,112 6,230 6,698 6,961 7,025 6,899 6,603 6,155 5,876 2,669 2,833 2,869 3,009 3,088 3,107 3,070 2,981 2,846 2,763 2,893 3,278 3,361 3,689 3,873 3,917 3,830 3,622 3,308 3,113 Value of Timber ($) Cost ($) Net Benefits ($) Discounted (r= 0.04) Value of Timber ($) Cost ($) 469 873 1,097 1,153 1,091 960 835 803 644 500 376 276 197 137 113 1,141 1,262 1,329 1,346 1,327 1,288 1,251 1,241 1,193 1,150 1,113 1,083 1,059 1,041 1,034 Net Benefits ($) -672 -389 -232-193 -237 -328 -415 -438-549 -650 -737 -807 -862 -904 -921 Value of timber - price x volume/1 + d Cost - $1,000+ ($0.30 x volume(1 + r Net benefits value of timber - cost Price - $1 567 1,288 1,964 2,507 2,879 1,170 1,386 1,589 1,752 1,864 -603 -98 375 755 1,015 3,080 1,924 1,156 3,128 3,126 3,046 2,868 2,623 2,334 2,024 1,710 1,449 1,938 1,938 1,914 1,860 1,787 1,700 1,607 1,513 1,435 1,190 1,188 1,132 1,008 836 634 417 197 14