206 FOREST VALUATION 



may be expressed separately, as if each represented a rate of 

 interest, as 



F (i.oa)(i.o6)(i.oc) = Vi, 

 which is slightly greater than 



In ascertaining the values of the factors a, b, etc., for a period of 

 some years, these values must either be taken as representing 

 simple interest, or, if compounded, the rate quoted for the 

 entire period must be much lower than the probable annual 

 increase in the earlier years. 



195. Increasing Future Values as a Basis of Appraisals. 

 As set forth in Article 139, the elements of increase in value 

 inherent in the character and condition of the property itself 

 must be accepted as reliable and occurring in the natural course 

 of events, and will be recognized in appraisals for public purposes, 

 such as damage suits and condemnation proceedings. These 

 include growth and quality increment. But the factors of 

 closer utilization and rising prices depend upon outside influ- 

 ences shown to be affected by a complex of causes and therefore 

 not capable of reliable diagnosis. 



The acceptance of such increased prices as a basis of appraisals 

 must be determined by the purpose of the appraisal, and by 

 the evidence on which the conclusions rest. Reasonable con- 

 servatism is required in appraisal of damages. A more liberal 

 construction is permitted in condemnation proceedings. In 

 either case, evidences to prove the probability of rising prices 

 must take into account both the general and local factors dis- 

 cussed in this chapter, and it will usually be found advisable 

 to make very moderate claims on this score. 



As a basis of valuation to determine a tentative sale value, 

 it is equally necessary to treat the element of future prices 

 conservatively. The purchaser is entitled to this source of 

 future profits, and should base his price for the property upon 

 present rather than future prices for products. As tending 

 merely to show the probable amount and present value of these 



