The monetary value of a durable factor reflects not only its Discounted Marginal Value Product in its immediate use, but also its DMVPs in future uses. Uses in the far future, of course, must be heavily discounted by interest. Consider, for example, a machine that can be used 20 times, at annual intervals beginning immediately, and which will provide a DMVP of $10 in each annual use. What is the present monetary value of that machine, if we assume a constant free-market interest rate of 10% per annum?

The $10 annual return is known as the rent on the good. The present money value of the good is the sum of its present and discounted future rents. While the present value of the machine's first use is $10, the second rent must be discounted by one year's interest. The third rent must be discounted by two years of compound interest, and so on:

year 0		year 1		year 2		. . .		year 19

$10	+	$10 (1 / 1.1)	+	$10 (1 / 1.1²)	+	. . .	+	$10 (1 / 1.1¹⁹)	= $93.65

Examining this calculation, how do you think changes in the interest rate might affect the value of a durable good?

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