VALUATION OF ASSETS 41 



income, such as is received from forest crops, are identical in 

 character, and it is more important to recognize this essential 

 similarity than to seek to differentiate forest valuation from other 

 forms of appraisal. In the text, the synonymous terms "capital 

 value" and "expectation value" will be used interchangeably, 

 rather than the more cumbrous term "capitalized income 

 value." 



63. Future Prices and Values. The determination of 

 capital value rests upon the ability of the appraiser: first, to 

 ascertain the amount and character of the income, its duration 

 and the total for the entire life of the enterprise; and second, 

 to appraise the probable value of this income for the time when 

 it is received, by a conjecture as to prices for the future products 

 (Chapter XII). But the future is shrouded in uncertainty, 

 which becomes more impenetrable the longer the period over 

 which such predictions must extend. The past is an open 

 book. The knowledge thus obtained by experience is the guide 

 in the process of appraisal. It is comparatively ea^sy to deter- 

 mine the probable productiveness of property for any business 

 which presents the results of past experience. In new and 

 untried ventures this is uncertain. But future prices are far 

 more of a problem, since they are the resultant of the complex 

 of all the economic forces of society. Attempts may be made to 

 predict changes in prices, due either to changing price levels 

 based on fluctuation of the value of money, or changes in the 

 supply and demand for the specific product. Such predictions 

 can only be based on present tendencies interpreted in the light 

 of past, especially recent, experience. 



When reliable authority is lacking for prophesying the prob- 

 able nature and amount of changes in prices, although they are 

 certain to occur, the appraiser is forced to accept present prices 

 as the basis for future income. This principle finds its expres- 

 sion in appraisals for damages, when speculative increase in 

 future income is not admitted in valuations. 



64. Future Expenses. The net present value of income is 

 equal to the margin over future expenses ( 10). These future 

 probable expenses must be appraised as carefully as income. 



