152 VALUATION OF FORESTS. 



expectation value of the present growing stock reaches its 

 maximum. 



The value of the forest is then represented by the formula 



> Y+ Txl'o>'- n +. . .-E l-o'-n 



If the present growing stock is abnormal, a further modifi- 

 cation is required, by substituting the abnormal for the normal 

 returns. 



2. Cost Value of a Forest. 



a. The Cost Value of a Forest is equal to the Cost Value of the Soil, 

 plus that of the Grotving Stock. 



(1) For any soil value : 



c)l-op m -[T a xl'op m - a +. . . 



(2) By introducing the expectation value of the soil, the 

 above becomes, for normal woods : 



-[T a xl'op m - a +. . , 



l'op>- n +. . .+ j|^+. . .-c) 



l'op r -l~ 



This, it will be observed, is equal to the expectation value 

 of the forest. 



b. The Cost Value can be cakulated direct out of the Expenses incurred. 



The method is similar to that followed in calculating the 

 cost value of the growing stock, but the value of the soil is 

 added instead of the rental only ; hence 



m F e =Sxl'op m +E (l'op m -l)+cxl'op m -(T a xl'o2} m - a +. . .) 

 = (S+E+c) l'op m -[T a xl'op m - a +. . . 



as before. 



