OF FORMULAE; 17 



g. Change of Periodic to Yearly Payment. 



Where a forest property furnishes an income only every twenty 

 years it may be desirable to convert this periodic income into a year- 

 ly one. If this property, on account of the periodic income is worth, 

 or has a safe income value of : 



$48000 48000 



2-^ = -g = $60,000 



1.03 i i. 80 i 



and the bank or trust company is willing to accept this as fact and 

 pay the owner a yearly interest on the full $60,000 at 3% ; the owner 

 of the forest would receive 0.03 X 60,000 = $1,800 per year. 

 This may also be stated as follows : 



$48,000 _ 1800 . 

 I.03'-" i ~ .03 



or the yearly income, 



_ $48,000 (0.03) 



loOO .YI 



1-03 i 

 In general then : 



A a A (.op) 



(i.op* i) (.op)' i.op* i 



h. Table of Formulae. 



As above developed. 



No. FORMULA. MEANING OF FORMULA. 



_ ( I0 n n ) Prolongation of initial capital C for n years at 



p per cent. 



2 r o __ 'C Q Discount of final capital Cn for n years at p 



i.op n per cent. 



3. Cn _ n Final capital C n divided by initial capital Co to 

 Co ~ find interest rate p. 



ofTon 11 T") Sum. or end value of a series of payments a 



4. Cn = S = ( v ^- coming every year continued for n years com- 



(i.op i) pounded at p per cent. 



Present value of a series of payments a com- 

 / n _,>> ing every year continued for n years com- 



5. Co = - ^ pounded at" p per cent and discounted _at the 



(i.op i) i. op same per cent, first payment to come in one 



year from now. 



