SECOND APPROXIMATION

Consequently, the net result of the double choice (min-ing use and even time shape) is to increase the perpetualincome of $450 offered by farming to a perpetual incomeof $455.50. This new perpetual annuity has exactly thesame time shape as that derived from the farming use,but is larger by $5.50 per annum.

Incidentally it may be observed that this miningincome, thus evened out by financing into a uniform$455.50 per year, exceeds the uniform farming income of$450 in exactly the same ratio as the present value($9110) of the mining income exceeds that ($9000) ofthe farming income.

The following table exhibits the operations in detail:

Table 3

Mining and Farming Use Compared

OwnerReceivesfrom Mine

Of whichHe Lends

Leavingfor RealIncome

As AgainstWhich theFarming UseWould HaveYielded

$2000

$1544.50

1344.50

$455.50

$450

450

1800

455.50

1600

1144.50

455.50

450

1400

944.50

455.50

450

1200

744.50

455.50

450

1000

544.50

455.50

450

800

344.50

455.50

450

600

144.50

455.50

450

400

—55.50

455.50

450

200

—255.50

455.50

450

000

—455.50

455.50

450

etc.

etc.

etc.

etc.

etc.

Or, instead of wanting a perpetual even flowing income,the land owner may prefer as his model the time shape ofthe forestry income. He will not, however, on that ac-count, choose this forestry use in preference to the mininguse. He will simply lend at interest from the items of min-

[137]