64 



R = 



i. op i 



o.op 



Formulas IX to XII are of great importance in forest valuation. 

 The conception that a rental may be perpetual is difficult to 

 grasp. But this is merely another way of stating that the prop- 

 erty producing the rental does not depreciate in value. Grant- 

 ing this premise, the receipt of income for any given period 

 leaves the property capable of yielding another return of equal 

 value. Since this assumption can be extended indefinitely, the 

 expected income may be regarded as perpetual. 



Formula XII is customarily used to determine the money 

 capital which will produce an annual income of r. If we assume 

 that money remains of the same value, and nothing occurs to 

 impair the integrity of the capital, it can be imagined that 

 this income is perpetual. In the case of land whose fertility is 

 maintained by proper methods, so that the net income does 

 not represent a drain of capital, or soil depreciation, the same 

 conditions are true, and the capital value of the soil may be 

 found by use of Formula XII. 



This premise will hold for forest lands producing crops at 

 long intervals. The trees maintain the productiveness of the 

 soil. In this case, the net income, being intermittent, is cap- 

 italized by Formula IX. 



For practically all other forms of investment, revenue is 

 apt to be accompanied by depreciation of capital, which causes 

 the income to diminish and finally terminate, thus requiring, 

 instead of the simple formulae just quoted, the use of the formulae 

 IV, VI or VIII for the present value of temporary rentals. 



These values are less than those obtained by - - - or ^- 



i.op n i o.op 



