Professor Wiecet's query was On Wed, 31 May 1995, William M. Wiecek wrote: > > Approximately when did the concept of discounting future >income streams to arrive at present value become a >commonplace among economists? There was a survey article that appeared in the Journal of Economic Literature within the last decade that traced the present value calculation technique as it emerged as a customary business practice to reply the famous and infamous "payback period" rule. I can go down the basement and hunt through the back issues but I hope one of us remembers the name and article. On a related matter. Assets such as land were often valued as "x years purchase." Suppose the annual rent were $l,000 and land were selling for 10 years purchase then the land's price or present value would be $10,000. This is equivalents to computed the discounted sum of future rentals at 10%. Petty ask why land which produces an infinite flow of net benefits should sell for a finite market amount and concluded that its values is equal to the sum of rentals over the time period x where x is the number of years three generations coexist on earth. This means the grandparent, sibling and grandchild. If my memory serves the value of x that Petty used was 21 years. I shall leave it to others to calculate the implicit discount factor. I wonder if these historical tidbits are what Professor Wiecet wanted from us? L. Moss