Skc. 9] VALUE OF CAPITAL 221

income stream into arbitrary installment sand discounting
each installment separately.’
The value of the income stream has heretofore been
always reckoned in advance of its occurrence; that is, we
have discounted income to obtain present value. We may,
however, consider an income as paid for at the close of
the period, in which case we have to deal with its “accumulated”
 value or its “amount.” ?

§9

Thus far we have considered the possibility of but one
income stream from any given capital wealth. But it often
happens that, with one capital instrument, there is a choice
between various income streams. Land may be used for
grazing, agriculture, building, or recreation purposes.
Tools may be employed in a variety of ways, and the same
is true of innumerable articles of wealth, particularly when
taken in combination. What determines the choice of the
series of uses to which any given instrument may be put?
Evidently that series of uses or income stream will be selected
 which yields the maximum present value. Thus,
if land used for grazing purposes will yield a net service of
$1000 a year forever, and interest is taken at four per cent,
its value for grazing purposes is evidently $25,000. If,
in like manner, the capital-value for some other use, say for
growing wheat, is $20,000, it is clear that the land will be
employed for grazing rather than for growing wheat.
Sometimes the two series of uses to which land or other
wealth may be put differ, not only in their amount, but in
their time of beginning or ending. In a city, for instance,
land may be used either for present dwelling or for future
business-purposes, and it often becomes a question which
use is the more valuable. In case the city is growing
1 For a fuller statement, see Appendix to Chap. XIII, § 12.

? For discussion, and for formul® for the capital-value of any income,
 discontinuous or continuous, see Appendix to Chap. XIII, §13.