4 ms·

6000/0.04 = 150 000 Essentially, those 6K a year is the equivalent of a 150K portfolio

• cinntaile 4y ago
  I want to push back against this a little. He gets $500/month now, there is no guarantee he will keep receiving that number when he stops maintaining and improving his app. I would assume the number will go up if he keeps improving it, but if he stops it will eventually become 0$/month.
  • jackblemming 4y ago
    There's no guarantee $150k invested will have 4% returns either.
    • p_j_w 4y ago
      No, but if I had to bet on one over the other, I'm going with 4% returns.
      • beambot 4y ago
        To be fair: It will probably be easier for him to go from $500/mo to $1000/mo much easier than it will be to go from 4% APY to 8% APY.
  • jhgb 4y ago
    Doesn't time value of money decrease this effect? Assuming a fixed revenue over time, future revenue is much less relevant, so is its loss.
    • nonameiguess 4y ago
      That's what the 4% is. A perpetuity that pays out $6000 a year is valued at $150,000 assuming a 4% discount rate. Without a discount rate, the value of any perpetuity would be infinity.
• CPLX 4y ago
  No it’s not it’s the equivalent of a $6,000 a year part time job. $150k in 20 years is still exactly $150k and produces returns. A 20 year old mobile application has no value whatsoever. Difference is apples and hand grenades.