Skc. 4] EARNINGS AND INCOME 233

obliges us tu do, that all these are definitely foreseen at the
start, the colt would be worth the discounted value (at 5
per cent) of all these, or about $135. It will therefore
yield during the first year a return of 72, or — 15 per cent.
The value-return for the second year, reckoned on its capitalvalue
 taken at the beginning of that year, is 3%, or 6 per
cent; on the third year. 2, or 13 per cent, on the fifteenth
year about I, or 100 per cent. The entire series may be
seen from the following table: —

 

 

 

 

CAPITAL-INCOME
 VALUE AT RATE
DURING YEAR | BEGINNING OF OF RETURN
YEAR
IstVear,” +... —-$20 $134 - 15%
9doyear’ , LEN 10 161 6
Bd year... io initia . 20 159 13
dthyear . . +s a 20 146 14
Sthyear ,  . . ... 20 134 15
Sthyear 71,7. 20 121 17
Hh year «iu iil n 20 107 19
Sthyear . ...:... 20 92 22
Othyear . . . . . 20 76 26
thyear . 45... 20 60 34
Yithyear: .... wali 10 43 23
thyear . +: . wv. « 10 35 28
1ISthyear .: ... . -.. 10 27 37
4thyear . . . 10 19 54
15th year. i. on 10 10 — 100 +

 

 

 

 

From the foregoing examples it is evident that a property
 which yields 5 per cent to the investor may yield in
individual years either more or less than 5 per cent. The
dwelling house yielded more than 5 per cent for 50 years,
and then ceased to yield income. The forest yielded less
than 5 per cent for 20 years, and thereafter yielded 5 per
cent on its value at that time. The colt yielded rates ris-