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Could you explain a bit more please? If the annual interest rate was supposed to be 2.5% of the value of 1000 pieces of 3.5g gold coins, which works out to 0.02
by computator 6y ago
Could you explain a bit more please? If the annual interest rate was supposed to be 2.5% of the value of 1000 pieces of 3.5g gold coins, which works out to 0.025 x 1000 x 3.5 = 87.5g of gold per year, why aren't they receiving 87.5g of gold or the equivalent of $4375 a year?
- URSpider94 6y agoThe loan wasn’t denominated in gold, it was denominated in guilders. At the time, guilders happened to be made of gold, but that’s somewhat irrelevant. The interest is 2.5% of the initial value of the bond in guilders, which has almost certainly deflated drastically, and will continue to do so. Put another way, the loan will continue to pay out 14 Euro per year 100 years from now, when that will likely be the cost of one can of soda.