124 VALUATION OF FOREST SOIL. 



(2.) Annnalhi Eecurnnfi Expenses. — Let e represent the 

 value of all annually recurring expenses, as cost of adminis- 

 tration, taxes, etc., then the total present value of all such 

 expenses comes to -f- 



or the capitalised value of the annual expenses. 



(3.) Periodically Occurring Expenses. — These are dealt with 

 as has been sho^Yn in the case of thinnings or items of minor 

 produce. 



(4.) Expenses of Harvesting and of Collection of Revenue. — 

 These are alwaj^s deducted from the receipts, and they do not 

 appear in the account. 



r. Formula for the Expertatioi Value cf Forest Soil. 

 This formula would be represented by an addition of all 

 the items enumerated under a less those under h. In order 

 to shorten the formula, without destroying its accuracy, it may 

 be assumed — 



(1.) That T, , To . . . T,^ represent thinnings as well as 



items of minor produce ; 

 (2.) That the expenses are reduced to the cost of formation 



and the annually recurring expenses ; 

 (3.) That the cost of formation at the commencement of 



each rotation comes to the same amount. 

 (4.) That e represents the difference between the annually 

 recurring expenses and the annually recurring receipts, 

 such as grazing fees, rent of shooting, etc. If the 

 latter are higher than the former, then e, respectively 

 E, would be positive. 

 The expectation value Se of the soil is then represented by 

 the formula — 



S _ Yr+1'aXlOp''^ + - • • + T,xi-Op'' "-cXlOp'' -g 

 lOp-— 1 



Example. — An acre of land is to be cultivated at once with 

 Scotch pine, and to be worked under a rotation of 80 years. 



