Suc. 3) SUMMARY OF PART III "309,

it represents the accumulated value of past outgo (less that
of past income, if any). From this it follows that the
value of the capital AB is, on the one hand, less than
the future total income which it represents, and greater
than the past outgo. This capital-value may be regarded
as made up of the elements b, b’, b'”, which are respectively
 the discounted values of the respective larger magnitudes
 a, a’, a”; and, on the other hand, as made up of

al

 

 

A
Fic. 17.

b'"' bv, b”, which are the accumulated values of the respective
 smaller magnitudes a'’’, a", a”. By putting together
the elements of which AB is composed, we see, on the one
hand, that AB is less than the anticipated income and
greater than the past outgo; and consequently, a fortiort,
that the past outgo is less than the future income. Kor
the sake of simplicity in our illustration, we have chosen a
point of time after all the outgo and before any of the income
 has accrued ; but the same principles could be worked

out upon such a diagram, nO matter what point of time were

chosen. In other words, in the normal case the value of any

capital is intermediate between the value of its past cost
of production or acquisition and the value of its future

income.