EXPECTATION VALUE. 



131 



the expectation value of the soil with 2J and again with 3 and 

 4 %, the following values are obtained : 



This example shows : 



(1) By raising the per cent, from 2J to 3, the expectation 

 value for a rotation of 80 years falls from 250 to 124 shillings, 

 and calculated with 4% to - 3 shillings. 



(2) By making the calculation with 4 / o the expectation value 

 becomes practically nil, and under a higher per cent, it becomes 

 negative. 



(3) The expectation value of the soil culminates : 



Calculated with 2J% at about 82 years. 

 )> )> 3 ,, ,, 78 ,, 



4 72 



J) J> t J) J> ~ J5 



3. Merits of the Method of the Expectation Value. 

 The expectation value indicates the true economic value of 

 the soil for forest culture, because it is based upon the produc- 

 tive power of the land when used for the production of forest 

 crops. It gives the value which corresponds to the net returns 

 calculated with the adopted rate of interest. On the other 

 hand, the method gives correct results only under the following 

 conditions : 



(a) That all items of expected incomes and expenses are accu- 

 rately known. In order to comply with this condition, 

 accurate and suitable yield tables are required. More- 

 over, future prices of produce and expenses must be 

 estimated on the basis of those at present prevailing 



