EXPECTATION VALUE. 125 



It is expected to jaeld the returns given in the money yield 

 table at page 120. The expenses are expected to be as 

 follows : — 



Cost of formation every 80 years = 60 shillings. 

 Annual expenses for administration, taxes, etc., less annually 

 recurring incomes = 3 shillings. 

 Interest = 2i per cent. 



The expectation value of the soil will, in that case, amount 

 to^ 



Sc = 



3,004 + 5 X 1-025^" + 44 X l-025^" + 87 X l'0253o 

 + 118 X 1-025-Q + 134 X IO251" - 60 X l-025^''_ 3 

 1025«"' — 1 -025- 



By using the tables in Appendix II., page 340, this value 

 becomes — 



S, = (3,004 + 5 X 3-4371 + 44 X 2-6851 + 87 X 2-0976 + 



118 X 1-6386 + 134 X 1-2801 - 60 X 7-2096) X '1610 - 120 



S, = 3,254-1333 X "1610 - 120 = 403-9155 shillings, 



or, 



*S; = 404 shillings = i:20 4.s. OcL 



This shows that, for land yielding the above returns and 

 involving the above expenses, the proprietor may pay i620 4s. 

 an acre, if he is satisfied with 2h per cent, compound interest 

 on his investment. It will be shown later on, that he must 

 obtain the land for less than =£20 4s., if he desires to get more 

 than 2-|- per cent, on his investment. 



Assuming now, that the same acre of land is planted with 

 beech, that it yields the returns given in the money yield 

 table at page 121, and that all other conditions remain the 

 same, the expectation value of the soil will be-f- 



3,102+21 X l-025-"+!)l X 1025-"+123 X l-0-25i"- 60 X 1-0-25^''' 



1-025'^^ - 1 

 - 120 



S. = 366 shillings = £18 6s. 0(/. 



