Sec. 2] SUMMARY OF PART III 305

The diagram shows, in the second place (tracing it forward
 chronologically), that the capital-value alternately
rises and falls, rising in anticipation of approaching income
and falling as the installments of this income are, like coupons,
 successively detached from capital. The alternate rise
and fall of the capital curve may be equal, each to the other,
indicating that the income is “standard”; or the former

 

 

 

Fic. 14.

or the latter may be the greater, indicating respectively
that the income is above or below standard.
If any installment of income is negative —in other
words, is not strictly income, but outgo — we need simply
to reverse the direction of one of the teeth, as in Figure
15. In this case the capital-value is simply the discounted
value of the future income less that of the outgo.

§3

As we have seen, if we trace th
curve backward in time from the
to the beginning of the investmen

xX

e entire history of a capital
last installment of income
t or enterprise, the curve