140 Forestry Quarterly 



and all practical market questions: the new owner in the price- 

 making does not care what it has cost to produce the stand, what 

 soil rent and administration cost has been charged against it, 

 what revenues the previous owner has already derived from it; 

 the concrete present value, possibly derived from attainable 

 future yields alone interests him, hence soil value, cultural and 

 administration cost should be disregarded; they should be found 

 in the end result. 



He then develops a new way of approaching the problem by 

 the following analogy: somebody has a claim for a certain capital 

 {kn) to be paid him n years hence; he can then make an arrange- 

 ment with a bank to secure under assumption of a certain interest 

 rate {p) from now on an annual equal rent (r) , but for some reason 

 for m years this rent has not been drawn, and it becomes necessary 

 to determine the value of this accumulation of rents to the year m, 



then, since r = -. — ' „ ^ , the final value of m times recurring rents 

 l.op —i 



. kn.op ,, \.op'"-\ , \.op"'-\ 



up to the year m is - — — -r X — - = kn - — — — - 



^ -^ \.op"-\ .op l.op"-l 



for kn we can set the value of a tree or a stand and expect the 



same result. 



For instance, a 90-year-old tree would have $20 value, how much 



1 O330-I 

 is its value at 30 years, figuring at 3 per cent ? 20 V.090 ., = $2. 15. 



The same formula applies to the final harvest crop occur- 

 ring in the year u or the thinnings (D) occurring in o, b, etc., years. 

 The final formula for the stand value in the year m, becomes 



" \l.(?p"-l \.op,-\) ^ 



And this formiila applies to all systems of management, whether 

 uniform or imeven-aged, selection forest, etc., in the simplest way; 

 and the formulae for normal stock, for soil value may also be 

 developed from it. 



The author applies the old and new formula on a number of 

 concrete cases for comparison to show the diiTerence in method and 

 result, the latter after the old method being very variable accord- 

 ing to the soil values used. 



The new calculation is not only simpler and excludes any 

 arbitrariness (except the ^?), but gives the concrete present sale 

 value independent of costs and passed incomes. 



