Assuming, of course, that they had not paid it off long before.
And your example is intentionally distorted. If I said "I plant $100 worth of trees, and in 100 years I get $100,000 from the sale of the trees, at 5% interest, putting that money in a bank would lose me $86,850." My example would be no less valid, but the answer to which project would be more profitable is reversed.
If I payed back a loan that would be with money which would be an additional input into the investment and be part of the NPV calculus. The tree isn't going to produce any cash flow for 100 years so I can not use it to payback the loan until it is salable.
If the tree sold for 100K then it would have an internal rate of return of ~7.1% which would be higher then 5%, all your showing is that an investment with a higher rate of return is more profitable then putting money in a bank at a lower rate. Your hypothetical tree of high return and mine of low return just demonstrate that only investments higher then the rate of interest are profitable because profitability is effectively internal rate of return minus interest. That is why lowering interest rates stimulates investment because it makes all investment more profitable.