3 ms·
> So if we take 1900/x=70 years which would imply a rate of 4% which is reasonable. How did you get to 4% from the above calculation?
by victor106 6y ago
> So if we take 1900/x=70 years which would imply a rate of 4% which is reasonable.
How did you get to 4% from the above calculation?
- 317070 6y ago(2000B value - 100B assets) / (70B cashflow) = 27 years investment payback. At this point I think he did 100/27 years=4% interest rate per year. However, that would be for the simple interest case, i.e. not taking into account compounding. However, for the cumulative interest rate, you would normally do ln(2)*100/27 years = 70/27 or a 2.7% YoY interest rate. As a general trick: if you want to convert payback time to cumulative interest rate, use 70 instead of 100. There was a TED talk on the topic iirc.