Page:Indian Journal of Economics Volume 2.djvu/351

 PRINCIPLES OF PINANC 88?' In so far as a tute on machinery inapplicable, a higher being nee.essaty in lo&n the annuity method rate of repayment early is contracted for expendi- may 'be of capital years to counterbalance the high cost of repairs and risk of commercial obsolescence in later years, as well as the increased cost of new machines needed for replae'ement. The full solution is obtained by applying the  cos method, see E. A. Saliers, Princilles o/ Dreciatn (Ronald Press Co., N.Y.; 1915), p. 166. A principle which is not usually taken account o! is the secular depreciation of the value of National consequently decreases, revenue. increases at least as the and depreciation proceeds; given annual charge argued that 'the combined annual interest and capital repaid should be fast money. the burden of a it might be insraiments of arranged so as to increase slightly, say by one per cent per annran. On the other hand the growth of new public wans is so rapid that demands upon the revenue for the service of new loans cannot all be met, increasing annual charge for 'an old loan felt as a heavy burden. method of equal annual interest combined is between the present and the future. and an would be Consequently the annuity insraiments of principal and probably the most equitable as repayment should coincide with The period be arranged and duration, of to not of the work in most cases the estimated service taken as a whole, such as buildings, maehi- The prat- elaborated woodwork, etc., treated separately. application of this principle will be but of its component parts nory, tical later on in Chapter X,