INVESTMENT OPPORTUNITY PRINCIPLES

nearer the value of the steel it will become, and this, inturn, more nearly equal to the values of those innumer-able satisfactions which come about through the use ofsteel. These shiftings forward of the values of the inter-mediate income of forest, farm and mine toward thevalues of the ultimate satisfactions to which they lead,combined with possible readjustments in the values ofthese satisfactions themselves—the values of house shel-ter, bread consumption, etc.—will result in a change, say,in the items in the foregoing table, where we were assum-ing a 5 per cent rate of interest, to the following tablewherein the rate is 4 per cent.

Table 10

The Optional Income Streams oj Farming, Forestry, and Mining, asAffected by the Rate oj Interest

Farming

Forestry

Mining

1 sfc vea.r.

§500

$000

$2100

500

000

1900

500

350

1700

4th year .

500

450

1500

500

600

1300

6th year .

500

600

1100

500

600

850

500

600

650

500

600

450

10th year .

500

600

225

500

600

000

If, then, the rate is 5 per cent, the land owner will makethe most of his opportunities by choosing that use amongthe three which, computing from the figures in the firsttable, has the greatest present value; while if the rate is4 per cent, he will choose that which, computing fromthe figures in the second table, has the greatest presentvalue. If, then, the rate is 5 per cent, he will choose min-ing, since, as we saw in Chapter VI, §4, the present values,when we compute at 5 per cent, are: forestry, $8820;

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