88 FOREST VALUATION 



Cost of e for n - a years = E (l 'p~ ^ (see Illb, II), which 

 becomes E 



i.op n 

 Omitting the item of thinnings, 



Y+S s -E(i.op n -- 

 r . = 



i.op n a 



. 



i.op n a 



Including thinnings whose income is expected in the future, or 

 between the years a and n, 



(B 2 ) 



113. Value of Forest Property for Continuous Forest Pro- 

 duction. The substitution of sale value of land for its value 

 determined from income was a makeshift justified by the 

 change in its use. True forest land, devoted permanently to 

 producing timber, must be valued on the basis of the sum of all 

 future income which it is capable of producing. This will in- 

 clude the net value, not merely of the present stand, but of a 

 succession of timber crops, extending to infinity ( 86). 



The relative present value of the first crop compared with 

 others to follow is very large, but merely because the interval 

 between payments is correspondingly long. The income from 

 sale of a crop of timber does not differ in character from the 

 monthly payment of rent, and the value of the forest is as truly 

 the sum of all present values from future crops as that of the 

 house is the capitalized net rental or income. In the same way 

 that the value of the house represents, not the gross rent, but 

 the rent minus all outlay such as taxes, repairs and depreciation, 

 so from all future income from timber, deductions for expenses 

 must be made to get total net value. 



