COST VALUE. 139> 



(3) Present value of cost of formation : 

 = cxl-op m . 



Receipts. These consist of all previous thinnings and items 

 of other incomes ; they may be represented hy T a , T b , . . . T^ 

 Their present value is 



= T a x l-op m ~ a + T b x l-op m ~ b + . . . + T\ x l'op m ~ l . 



Should any items of income have occurred in annually equal 

 amounts, such as shooting, grazing, etc., they can be summed 

 up according to the Formula IV. 



The general formula for the cost value is therefore : 



m G c = (S + E) (l-op m - 1) + c x l-op m - (T a x l-op m - a 

 + T b x rop m ~ b + . . . + Tj x Top- 1 ). 



Here m G c still includes the thinning of the year m. If the 

 calculation is made for what remains as final yield to go on 

 with, then the thinning in the year m = T m must also be 

 deducted. 



Example. Taking the same data as before, the cost value 

 comes to : 



45 G C =(250 + 120) (l'025 45 -l) + 60xl-025 45 -(4xl-025 15 



+ 36xl-025 5 ). 

 45 (2 C = 891 shillings, as in the case of the expectation value. 



b. Notes on the Cost Value. 



The cost value of the growing stock depends on : 



(1) The absolute amount of the receipts and expenses up to 



the year m. 



(2) The Age of the Wood. The value rises with the age, 



but temporary exceptions occur, as immediately after 

 a thinning the cost value may be smaller, than imme- 

 diately before it. 



At the commencement of the rotation the cost value is equal 

 to the cost of formation. 



At the end of the rotation the cost value is equal to the value 

 of the final yield, provided that : 



