130 VALUATION OF FOREST SOIL. 



Early receipts from minor produce affect the expectation 

 value in the same way as those from thinnings ; hence they are 

 of great financial importance, as long as they do not unduly 

 affect later returns. 



d. The Time when the Costs of Production have to be Incurred. 



This affects the expectation value in a manner the reverse 

 of that produced by early thinnings and incomes from minor 

 produce. Expenses incurred during the early part of the 

 rotation affect the expectation value unfavourably; hence 

 it is important to keep the cost of formation as low as 

 possible. 



Example. The present value of the cost of formation 

 amounting to 60 shillings to be incurred at once and again 

 every 100 years is = 



c * //'' 60xl'025 10 



t >/>*- 1 1-025 100 -1 



65 '5 shillings. 



If the cost amounted to 120 shillings each time, the present 

 value would be = 



120xl'025 10 



r = 1B1 shlllmgs - 



Thus it may happen that the expectation value is higher 

 under the system of natural regeneration, than under the clear 

 cutting system with planting. 



e. The Rate of Interest with which the Calculation is made. 



A, high_rate_of interest^ gives alowexpectatign value of_tlie^. 

 soil, and vice versa. The value is, however, not in inverse pro- 

 portion to the rate of interest ; the former rises more rapidly 

 than the latter falls. 



Again, under a low rate of interest the expectation value 

 culminates later than under a high rate of interest. 



Example. Taking the same data as above, and calculating 



