4 ms·
15%? You might wanna do the math again dude. Also the entire point of an equity like arrangement is that the investor gets a larger fraction of the upside and
by esoterica 8y ago
15%? You might wanna do the math again dude.
Also the entire point of an equity like arrangement is that the investor gets a larger fraction of the upside and in exchange for agreeing to eat the downside if the investment doesn’t work out. Comparing it to the APR of a normal student loan misses the point entirely. With a regular loan you have to pay the same amount whether you’re making minimum wage or 200k/year, whereas with an equity-like arrangement you only have to pay the max amount if you make a lot of money.
- colpabar 8y agoI think everyone would have appreciated a correction of his math instead of just pointing out how he was wrong.
- benmanns 8y agoThe math is excluding compounding. A simplified look (payment due at end of 15 years) is around 6.3% annually https://www.wolframalpha.com/input/?i=2.5%5E(1%2F15)&assumption=%22%5E%22+-%3E+%22Real%22 https://www.wolframalpha.com/input/?i=2.5%5E(1%2F15)&assumpt... The math including payments is a bit more complex and will depend on how much you are paying during the loan term. I.e. if you paid 2.4x on day one and 0.1x the final day looks a lot different from 0.1x on day one and 2.4x the last day due to the time value of money.