Sec. 6] EARNINGS AND INCOME 241

contribution to the depreciation fund is evidently $30.
For at the end of the first year, before the income is received,
 the capital-value will, under the supposed conditions,
 become not $1070, but only $1040. The first item
of income, $70, is then received. This being deducted
from $1040 leaves $970, which is $30 short of the original

 

 

 

 

 

B
E
G
Cc \ -=D
A F

Fic. 8.

capital-value. Consequently it is necessary to restore $30
to the capital, in order to bring it up to the original level of

$1000. i
Tt will evidently make no difference whether the income

items are reinvested simply as additions to the original
capital, or invested at the same rate of interest In some other
form of capital. The owner of depreciating machinery may

R