The volume of standing timber in a 35 year old Douglas-fir stand under your management is estimated to be 28 mbf per acre. At age 40, the volume is expected to be 34 mbf per acre. Real stumpage price for the 35 year old timber is $280 per mbf. Real stumpage price for the 40 year old timber is expected to be $310 per mbf.

A) What is the average annual volume growth rate for this stand?

B) What is the average annual expected real price growth rate for this timber?

C) What is the average annual expected value growth rate for this stand? (hint: price growth plus volume growth=value)

D) If the real rate of return on equivantely risky alternative investments is 4%, would a profit maximizing timber company harvest this timber now or wait 5 years?