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What happens with inflation and interest over that 75 year span? Does the mandate to pre-pay use some formula to take that into account? I'm not familiar with
by ssmoot 15y ago
What happens with inflation and interest over that 75 year span? Does the mandate to pre-pay use some formula to take that into account?
I'm not familiar with general accounting practices, but it seems like if it didn't it would be potentially forcing the business to save far in excess of the funds necessary to meet it's obligations when the bill actually comes due?
- alttag 15y agoNo. As I understand GAAP, the projected inflation and projected income (including interest) are taken into account at least annually. The company then pays the delta (or underpays the next installment by the delta, if appropriate). A problem many govt agencies had over the past decade (even before the collapse) was too conservative of estimates on inflation and too exuberant estimates of interest. There was, for example, a federal policy (law, IIRC) passed early in the decade (2004-ish?) that many school districts and other agencies struggled with.