Skc. 2] VALUE OF CAPITAL 205 
exchange.” Still another application is to wealth which is 
in course of trade and of which, therefore, the only service 
to the owner consists in its sale. It is on this principle 
that a dealer reckons the value of his stock, by discount- 
ing its selling price for the time which will probably elapse 
before it is sold — deducting, of course, the prospective 
expense of selling, discounted in like manner. Similarly, the 
value of any article of wealth reckoned when that wealth 
is in course of construction is the present value of what it 
will bring when completed, less the present value of the 
cost of completion. For instance, the maker of an auto- 
mobile will appraise it, at any of its stages in course of 
construction, as worth the discounted value of its probable 
return when subsequently finished and sold, less the dis- 
counted value of the costs of construction and selling 
which still remain. Of course, the element of risk cannot, 
in such cases, be overlooked; but its consideration belongs 
to a later chapter. 
Another application of these principles of capitalization 
is to goods in transit. A cargo leaving Sydney for Liv- 
erpool is worth the discounted value of what it will fetch 
in Liverpool, less the discounted value of the cost of carry- 
ing it there. Other classical examples are wine, the value 
of which is the present worth of what it will be when 
“mellow” and ready for consumption; and young forests, 
which are worth the discounted value of the lumber they 
will ultimately form. In Germany and some other coun- 
tries, such appraisement of forests is now worked out with 
considerable precision. 
§3 
Tt seldom happens, however, that there is one item only of 
income or outgo earned by an article of capital. The items 
are unusually numerous. Perpetual annuities, for in- 
stance, form an important class, in which these items recur 
in equal amounts and during equal intervals forever. We