The nature of capital and income

Bibliographic data

Monograph

Identifikator:: 102659555X

URN:: urn:nbn:de:zbw-retromon-82920

Document type:: Monograph

Author:: Fisher, Irving http://d-nb.info/gnd/118533541

Title:: The nature of capital and income

Place of publication:: New York

Publisher:: The Macmillan Company

Year of publication:: 1923

Scope:: XXI, 427 Seiten

Digitisation:: 2019

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Capital and income

Collection:: Economics Books

200 NATURE OF CAPITAL AND INCOME [Cmar. XII terms of a perpetual annuity, or the premium on the price of this year’s goods in terms of next year’s goods. These two definitions of the rate of interest we have found to be interchangeable when either one of them is assumed to be invariable; but when this condition is not fulfilled the two are not interchangeable. Secondly, not only does the rate of interest have the two distinct meanings which have been given, but each mean- ing is subject to various interpretations, according as the interest is payable or reckoned annually, semi-annually, quarterly, etc., or continuously. Thirdly, as alternatives to the rate of interest we may em- ploy the rate of discount and the rate of capitalization. Both of these magnitudes also apply either in the price sense or the premium sense. Furthermore, like the rate of in- terest, they apply somewhat differently according as the reckoning is annual, semi-annual, quarterly, ete., or con- tinuous. The following table illustrates the various magnitudes which have been considered :* — EQUIVALENT RATES OF INTEREST, D1scoUNT, AND CAPITALIZATION A B C D Reciprocal Rate of Rate of of 4, or Recipro- Interest | Discount Rate of cal of B Capitalization Reckoned annually . . | 4.00% 3.85% | 25.0 yrs. | 26.0 yrs. Reckoned semi-annually | 3.96% | 3.88 % 25.3 yrs. | 25.8 yrs. Reckoned quarterly . . | 3.94% 390% | 25.4yrs. | 25.6 yrs. Reckoned continuously 3.929 | 3.92% | 25.6 yrs. | 25.6 yrs. Since the sixteen magnitudes in this table may be taken either in the price or the premium sense, and since, when in- 1 For their mathematical * dimensions,” see Appendix to Chap. XII, § 8.

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