INTEREST ON LAND 8l 



the states any money, they were simply taken charge of by the gov- 

 ernments, paid their way and all improvements to the present day. 

 And yet their value is set so high that the splendid net income bare- 

 ly makes 3%, in most cases not that. The strange part is that this 

 high value is not a fictitious one but a very real thing and that these 

 properties could readily be sold at these high prices. 



We have the same situation in the case of farm proj>erties in 

 Europe as well as in our country. 



3. Rate of interest made in a forestry enterprise starting 

 with bare land. 



Under this head come the ordinary plantations, where no forest 

 exists, where the bare land is considered as the real capital, where 

 the money for planting, etc., is or may be borrowed at the interest 

 rate used in the calculation. In this case then : 



yearly income X 100 yearly income X 100 a X 100 



~~ capital cost value of land Sc 



Since the income here is not a yearly one but a periodic one, 

 every r years, the value of the equivalent yearly income may be 

 found by the formula : 



_ A .op 



I. op'' — I 



The periodic income is: 



A = Yr -I- Ta ( i.opr-a)_ C ( i.opr)— Ed-opr— I ) 



and the above calculation for yearly income is then: 



(Yr -I- TafLopr-a-)— CCi-opr)— Ed.op'-— n .op c. / X 



a = —^ ' — — = Se(.op), and : 



i.opr— I '^■" 



a X 100 Se .op X 100 Se , 



p"=~s^= sS — -s^^ 'P 



To illustrate : 



If the land costs $10 per acre, the accepted rate, p, is 3%, and 

 the forest enterprise is such that it pays 3% on $30, i. e., makes the 

 land worth $30, then evidently the man makes on his cost value of 

 land on the $10, not 3% but 9%, or, as per formula : 



30 

 px = — X 3 or 9. 

 10 



This is an interesting statement and has value especially in the 

 United States where cost values of forest lands are still very low. 



