126 VALUATION OF FOREST SOIL. 



(2) Annually Recurring Expenses. Let e represent the annual 

 value of all annually recurring expenses, as cost of administra- 

 tion, taxes, etc., then the total present value of all such expenses 

 comes to 



^ = E, 

 'op 



or the capitalised value of the annual expenses. 



(3) Periodically Occurring Expenses. These are dealt with 

 as has been shown in the case of thinnings or items of minor 

 produce. 



(4) Expenses of Harvesting and of Collection of Revenue. 

 These are always deducted from the receipts, and they do not 

 appear in the account. 



c. Formula for the Expectation Value of Forest Soil 

 I 

 This formula would he represented by an addition of all 



the items enumerated under a less those under b. In order 

 to shorten the formula, without destroying its accuracy, it may 

 be assumed 



(1) That T a , T b , . . . T q , represent thinnings as well 



as items of minor produce ; 



(2) That the expenses are reduced to the cost of formation 



and the annually recurring expenses ; and 



(3) That the cost of formation at the commencement of each 



rotation comes to the same amount. 



The expectation value S e of the soil is then represented by 

 the formula 



Q V r + T a x rop r ~ a + . . . + T Q x l-op r q -ex rop r 



-T^i- 



or, as 



cxl'or) r c 



c + 



l'op r -l I'op r -l 



g = Y r + T > xl'pp^ + ... + T q xl-qp'-^-o_ ( E) 

 l-op*-l 



Example : An acre of land is to be cultivated at once with 

 Scotch pine, and to be worked under a rotation of 80 years. 

 It is expected to yield the returns given in the mpney yield 



