THE YOUNG FARMER 



obtains 10 per cent, his income would be 

 $500. If, on the other hand, he has an in- 

 vestment of $25,000 and obtains a return of 

 only 6%, his income is $1,500, or three 

 times the former amount. In neither case, 

 however, does this form of statement tell a 

 man how much of his income is due to his 

 brain and brawn and how much to the capi- 

 tal invested. 



What the young farmer wishes to know is 

 how much will he receive for his own time, 

 energy and skill, after deducting all ex- 

 penses and a reasonable interest charge on 

 his investment such a rate of interest as he 

 could get by placing his money in good 

 securities or what he would be required to 

 pay for his capital if he borrowed it. This 

 is best obtained by the labor income method. 

 With this method all expenses are sub- 

 tracted from all sales and to the cash bal- 

 ance thus obtained is added or subtracted 

 the increase or decrease in the inventory. 

 This balance may be called the farm in- 

 come. Thus far the procedure is just the 

 same as the interest on the investment 

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