220 NATURE OF CAPITAL AND INCOME [Cmar. XIII 
is exactly equal to the discounted value of the succeeding 
income, it is evident that the value immediately before its 
purchase must be exactly zero. Thus in Figure 6 let OM 
be the purchase price, and equal to OA, which is the capital- 
value immediately after purchase. The capital-value 
immediately before purchase is, therefore, zero, and the 
entire capital curve is the line OABCDEFH, which starts 
B 
  
  
  
  
M 
Fic. 6. 
at zero and ends at zero, but is above the zero line at all 
intermediate intervals. This represents the normal his- 
tory of any capital instrument if bought at a “ fair 
price.” 
If the flow of income is continuous, we may obtain the 
capital-value approximately by dividing the continuous