Sec. 8] VALUE OF CAPITAL 219

turn, the capital-value descends along the discount curve
to C, where CD, equal to AB, is added, and from D we
proceed finally by discount curve to P, vertically over O.
OP is, therefore, the capital-value of the property at the
“present ” instant, and its value at any succeeding instant
 is shown by following the course of the broken line
PDCD'C'D"C”B'"" A’ * This curve must descend to zero

 

 

B

Fig. 5.

finally, when the income is exhausted, and it usually
shows a tendency to decrease before this last payment
is reached. =
If, in a series of income items, a negative one occurs, 1 is
only necessary to reverse the capital curve, as shown in
Figure 5, where the first installment, AB, is outgo instead
of income. The curve PB’ evidently represents the behavior
 of capital-value, rising suddenly as the outgo AB
is passed and falling when the income A’B’ is received,

and so on to the end.
We may, if we choose,
security from the time immediately be
consider the purchase price itself as an outgo.

a for the capital-value of any series
dix to Chap. XIII, § 11.

trace the history of the value of a
fore its purchase, and
If this price

1 For the mathematical formul
of income installments, see Appen