118 PRELIMINARY MATTERS. 



(8) Determination based upon the rate of interest obtainable 

 in agriculture. 



As indicated above, differences exist between the two 

 methods of using the soil, which are difficult to estimate. At 

 the same time, forestry and agriculture resemble each other 

 in many respects, so that in many cases the agricultural rate 

 of interest can be applied to the forest industry. 



(4) Determination according to the rate of interest yielded 

 by Government securities. 



The rate of interest of Consols may be too high in some 

 cases, and too low in others, according to the general credit 

 of the State, and the nature of the forests. On the whole, 

 however, this is a safe way of determining the rate of interest 

 for the forest industry in all well regulated States. 



The rate of interest generally adopted in the calculations 

 contained in the following chapters is that of British Consols, 

 that is to say, 2J per cent. 



SECTION III. FORMULAE OF COMPOUND INTEREST. 



The following formulae, based upon compound interest, are 

 required in forest valuation : 



1. Amount or the Future Value to ivhicli a Capital 

 accumulates. 



A capital C put out at p per cent, compound interest 

 accumulates in the course of n years to the value : 



C n = C xl'op n .... (I.) 

 or log. C n = log. C + ?ixlog. I'op. 



wher e Iv*-- and 



2. Discount, or Determination of Present Value. 

 The present value C of a capital C n to be realized n years 

 hence, is : 



log. C = log. C n -nxlog. I'op. 



