TAUtt OF FORMULAS 



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 

 1.03""—] 



48000 

 1.80— I 



: $60,000 



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 =: = 60,000, 



1.03""— I .03 



or the yearly income. 



1800: 



$48,000 ("0.03) 

 ' 1.03"- 1 



In general then: 



(i.op' — i) Cop)' 



A (.op) 

 I.op' — I 



h. Table of Formulae. 



As above developed. 



No. Formula. 



I. C.=^Co(i.op°) 



Meaning op Formula. 

 Prolongation of initial capital Co for n years at 

 p per cent. 



2. Co = 



€. 

 i.op° 



Discount of final capital Co for n years at p 

 per cent. 



Final capital Cn divided by initial capital Co to 

 find interest rate v. 



Sura, or end value of a series of payments a 

 coming every year continued for n years com- 

 pounded at p per cent. 



5. c.= 



a(l.op°— l) 

 (i.op — i) i.op° 



Present value of a series of payments a com- 

 ing every year continued for n years com- 

 pounded at p per cent and discounted at the 

 same per cent, first payment to come in one 

 vear from now. 



