158 THE FINANCIAL RESULTS OF FORESTRY. 



This formula can also be written as follows : 



p _ (Y r +T a xl'op r - a +. . . + T q xI-op r --cxl'opr 

 \ l'op r -l 



It will be observed that the part in brackets represents the 

 expectation value of the soil; hence the above formula re- 

 duces to : 



P = S e -S c . 



In words : the profit in the case of a blank area is equal to 

 the difference between the expectation and cost values of the 

 soil. From this fact the following conclusions can be 

 drawn : 



(1) A profit is realized if the soil has been acquired at a 



lower rate than that indicated by the expectation 

 value of forest soil. 



(2) A profit is also realized if, although S e = S c at the 



outset, the soil expectation value is afterwards in- 

 creased, either by higher returns or by smaller costs, 

 or by both ; in other words, by improved and more 

 economic management. 



(8) The greatest profit is obtained by the adoption of the 

 rotation, species and method of treatment which give 

 the highest expectation value of the soil. 



(4) If the cost value of the soil is equal to the expectation 

 value, the profit is nil and the capital invested in the 

 forest yields exactly the per cent. p. If the cost 

 value is greater than the expectation value, the forest 

 industry involves a financial loss ; in that case it is 

 more profitable to take the capital out of the forest 

 and invest it otherwise, as long as in this way 

 p per cent, can be obtained with equal security. 



ii. CALCULATION OF THE PROFIT FOR A WOOD NOW m YEARS OLD. 



It is assumed that the returns and costs are of the normal 

 amount. 



