VALUATION. 143 



But it is simpler to deduct from the gross income all charges 

 incurred, and to take the mean for several years. 



With a regularly sustained annual yield under good manage- 

 ment, the woods forming a working-circle of x acres give an 

 annual return in the mature fall plus all the thinnings at 

 various ages, as also in minor produce, less cost of reproduction 

 and of general charges, so that the net annual income per acre 

 will be found by dividing the total net income by x. 



As this includes the net income from the capital in growing- 

 stock plus land, the result obtained cannot be used in comparing 

 the profit of forestry with that of agriculture. It merely shows 

 the net income, but gives no indication as to this being as 

 profitable as it ought to be for the given land. 



But the most profitable Rotation i.e., the rotation which 

 will probably yield the highest percentage on the capital value 

 of the woodland as estimated by the net monetary value of its 

 produce is found by making various calculations, each as if for 

 a single crop, in accordance with the following formula (the 

 same rate of interest being used in each case, of course), and 

 ascertaining the rotation showing the greatest profit by indi- 

 cating the maximum productivity or largest capital value for 

 land and growing stock (Faustmann's formula) : 



The productivity of the woodlands (as estimated by the net value of 

 the -timber crop, &c.) is = 



g 



l'Qp n -l Q 



Where 



F n = the net income, free from cost of harvesting, yielded by the 

 mature fall at the year n. 



T a , T&...T 2 = the net income, free from cost of harvesting, yielded by 

 the thinnings at the years a, b ...... q. 



p = the percentage or rate of interest which the woodlands are supposed 

 to yield annually on the investment represented by their capital value. 



c = the cost of forming the crop originally, or of regenerating or 

 replanting the area on the fall of the mature crop. 



<7 = the annual outlay for general charges (supervision, protection, 

 rates and taxes). 



