FINANCIAL VALUE. 239 



2. Calculation of the Financial Value of the Normal 

 Growing Stock. 



The various methods of calculating the financial value of the 

 normal growing stock have been explained at pages 144 to 148. 

 It has there been shown that the same results are obtained, 

 whether the value is calculated as the cost value, expectation 

 value, or the capitalised rental of the growing stock, provided 

 the expectation value of the soil is introduced into the account. 

 In each of those cases the value is expressed, for r units of 

 area worked under a rotation of r years, by the formula : 



Y^+T^ 



op 



in words the normal growing stock is equal to the capitalised 

 annual net rental minus the expectation value of the soil. 

 To make that growing stock truly normal, it is necessary that 

 the per cent, which the capital yields, should be exactly equal 

 to the general per cent. p. Every deviation from this leads to 

 loss. As it is impossible to keep a forest always in that 

 condition, it follows that the financial normal growing stock 

 has only a theoretical value, which assists in the comprehension 

 of the working of the capital invested in forestry, but is of 

 little importance in determining the yield of forests. 



