376 NATURE OF CAPITAL AND INCOME

or DC, which is the total discount on BE; i.e. the amount by
which it is, as Bohm-Bawerk says, “diminished in time perspective.”

Similarly, the capital-value of the annuity, taken at any time
later A’ (just after an installment of income), is equal to the

D E

 

 
 
 

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Fig. 40.

smaller sum GH. Thus the capital-value gradually decreases
in accordance with the distance of the curve CE from the
line DE.
In this representation the discount curve was drawn through
E. If another is drawn through D it may be shown that EF
is the “amount” of the terminable annuity, or its value at the
time it terminates, if we suppose that each individual item is put
at interest from its date to the point of time B. This “amount,”
EF, is called the “total interest” on that capital in that interval.
In the same way, at any intermediate time just after an installment,
 GI will represent the value of the annuity concentrated
at that point, and this value will consist of two parts, HG,
which is the (discounted) value of the part subsequent to KX,
and HI, the (accumulated) value of the part preceding A.