EXPECTATION VALUE. 



29 



e. The Rate of Iiitprfi<i with ivliich the Calculation is made 

 A high rate of interest gives a low expectation value of the 

 soil, and vice versa. The value is, however, not in inverse 

 proportion to the rate of interest ; the former rises more 

 rapidly than the latter falls. 



Again, under a low rate of interest the expectation value 

 culminates later than under a high rate. 



Example. — Taking the same data as above, and calculating 

 the expectation value of the soil with 2i, and again with 3, 

 and 4 per cent., the following values are obtained : — 



This example shows : — 



(1.) By raising the per cent, from 2J to 3, the expectation 

 value, for a rotation of 80 years, falls from 404 to 225 shillings 

 and calculated with 4 per cent, to 43 shillings. 



(2.) By making the calculation with 4 per cent., the expecta- 

 tion value becomes very small, and under a higher per cent, 

 it becomes negative. 



(3.) The expectation value of the soil culminates : — 



Calculated with 2J per cent, at about 80 years. 

 „ 3 • „ „ „ 70 „ 

 „ 4 „ „ „ 60 „ 

 (4.) If the proprietor is satisfied with 2| per cent, on his 

 investment, he can afford to pay ^£20 4s. per acre for the 

 land; if he expects 3 per cent., only ^011 lOs.; if 4 per cent., 

 only £S Is. 



