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by didgeoridoo
1023 days ago
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So when the report says “10 times what they paid”, it means “10 times the amount the $1B would be worth in 75 years at the currently-forecasted risk-free rate of return”? I can’t imagine that’s true, but who knows I guess. |
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However, the company receives money every year not a single lump sum at the end. If I lend you 10$ and you agree to pay me an inflation adjusted 1$/year for 100 years that’s vastly better than getting an inflation adjusted 100$ in 100 years.
In the initial example the first dollar is discounted X%, the second X%^2, the third X%^3… Where getting paid an inflation adjusted 100$ after 100 years is fully discounted X%^100. The first case is equivalent to a bond paying nearly 10% + inflation with annual payments where the second is closer to 4.7% + inflation without annual payouts.
PS: Further it’s ~zero risk as the contract states the city is responsible if revenues fall below projections.