3 ms·
No, inflation doesn't increase the present value. If anything, the proper way is to discount the future (potential) costs by say 5-10% per year, as the business
by croemer 2y ago
No, inflation doesn't increase the present value. If anything, the proper way is to discount the future (potential) costs by say 5-10% per year, as the business may not exist forever etc. The net present value of an annuity of 360 dollars with 10% discounting rate is 360/0.1=3.6k. So for ten accounts 36k.
Sure if you discount by less, say 5% (due to e.g 5% yearly price increase) thst doubles to 72k, but it's still much much lower than your wrongly calculated 360k.
How much would you be willing to pay for that lifetime plan? Not 21k. Surely not.