THE THEORY OF INTEREST

shape of A'B' and the superior present value of AB. Ascompared with A'B' it has the same shape but a greatersize.

CHART 15

Enlarging Income Stream Through Double Choice.

In practice, of course, the two steps are usually madesimultaneously, not successively. In fact, usually the bor-rowing or financing often precedes the choice of option,thus reversing the order of presentation here adopted forconvenience of exposition. So it would be quite as trueto say that the loan, with the choice of option it makespossible, is made to secure an increased income as it is tosay that the loan is made to even up the distorted incomegiven by the option chosen.

But were it not for the possibility here assumed ofmodifying the time shape of his income stream by bor-rowing and lending, or buying and selling, the land ownerwould not feel free to choose the one from among theoptional income streams which possesed the highest pres-

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