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Reinvestment Rate and the Analysis of Forestry Enterprises

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Two forestry investment situations are used to illustrate the importance of the reinvestment rate when the rate-of-return (IRR) criterion is applied. One, involving the allowable-cut effect, demonstrates how an 80 percent IRR translates to a realizable rate of return (RRR) of 13 percent if the reinvestment rate is 10 percent. A short-rotation hardwood coppice investment generates a 29 percent IRR, but the RRR is only 16 percent if the reinvestment rate is 10 percent. A method for calculating RRR is given.

Document Type: Journal Article

Affiliations: Professor of Agricultural Economics, Washington State University, Pullman

Publication date: 1980-12-01

More about this publication?
  • The Journal of Forestry is the most widely circulated scholarly forestry journal in the world. In print since 1902, the Journal has received several national awards for excellence. The mission of the Journal of Forestry is to advance the profession of forestry by keeping forest management professionals informed about significant developments and ideas in the many facets of forestry: economics, education and communication, entomology and pathology, fire, forest ecology, geospatial technologies, history, international forestry, measurements, policy, recreation, silviculture, social sciences, soils and hydrology, urban and community forestry, utilization and engineering, and wildlife management. The Journal is published bimonthly: January, March, May, July, September, and November.

    2015 Impact Factor: 1.476
    Ranking: 22 of 66 in forestry

    Also published by SAF:
    Forest Science
    Other SAF Publications
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