Finance Question - 20 bucks via paypal to the first one who answers it! - Page 2 - GoFuckYourself.com

Rick Latona · 07-02-2003, 06:15 PM

Quote:

Originally posted by tranza

Uhm.... Impossible....

Disconsider the interest: 2250 * 12 * 40 = 1,080,000
2750 * 12 * 18 = 594,000

Right! And if a guy is giving you 1.08 Million dollars over 40 years, what is he really giving you???? That my friends is the question.

BlueDesignStudios · 07-02-2003, 06:16 PM

Rick - did you see my explanation?

traffic addict · 07-02-2003, 06:19 PM

Quote:

Originally posted by Rick Latona

Right! And if a guy is giving you 1.08 Million dollars over 40 years, what is he really giving you???? That my friends is the question.

This is not the answer read my last respond and you will understand why my first one was the only one corect up t now and all the others are just bullshit

tranza · 07-02-2003, 06:20 PM

Quote:

Originally posted by Rick Latona

Right! And if a guy is giving you 1.08 Million dollars over 40 years, what is he really giving you???? That my friends is the question.

On A: you'll have 1,460,541.37
On B: 677,872.51

But, if you question is the oposite: I have now 1.08 million, how much have I earned each month in the past 40 years with a 8% annual interest I'd have to do the math again.....

Rick Latona · 07-02-2003, 06:22 PM

Quote:

Originally posted by BlueDesignStudios
Rick - did you see my explanation?

I don't understand your formula but that is only because of my poor math skills. You certainly seem to be the only one that truely understands the question. So, if...

NPV A: $323,595.88
NPV B: $314,299.14

Then I would go with B because it comes in 18 years rather than 40 years. I sure hope you are right or you are costing me the differnce plus the 20 bucks I am sending you now. So, what's your addy?

StripperBiz · 07-02-2003, 06:25 PM

OK
A IS THE ANSWER THE MONEY IS BETTER IN YOUR POCKET. GET THE MONEY IN AND INVEST IT YOUR WAY. 40 YEARS IS A JOKE THAT WILL NEVER COME TO FRUITION. EVEN BANKS DON"T GO OUT LONGER THAN 30 YEARS.

REMEMBER CASH IS KING AND FUCK EVERYTHING ELSE

traffic addict · 07-02-2003, 06:25 PM

Hi Rick as you said

Quote:

Originally posted by Rick Latona

I don't understand your formula but that is only because of my poor math skills.

So here it is again just for you

The numbers that you see in my formula are present value, if you want to know the value in the end of the period you need to use a deferent Formula, but it doesn't mater any way, because you need to know what is the best offer, and the best way to check it out is by using the present value of the offer.

there is no logic in checking what will be the value of a in another 40 years and to comper it to the value of b in another 18 years.

You need to bring bouth offers to the same date, and that is why you are useing the present value formula.

you can trust me, I have an MBA from Wharton

AZBret · 07-02-2003, 06:26 PM

Quote:

Originally posted by BlueDesignStudios
This question is a simple NPV calculation.

It can be done in many ways, Excel is probably the quickest & easiest.

You simply enter in the monthly payments for each, the monthly interest rate (8%/12), and the answer pops out for each:

NPV A: $323,595.88
NPV B: $314,299.14

Thus A is $9,296.74 better than B in today's value.

Now how do I pick up my $20?

This can be confirmed using Excel's built in formula for present value:

PV(0.08/12,480,2250) = $323,595.88

PV(0.08/12,216,2750) = $314,299.14

Thus the 40 year option has a higher present value by $9,296.74.

WiredGuy · 07-02-2003, 06:26 PM

Quote:

Originally posted by Rick Latona
Then I would go with B because it comes in 18 years rather than 40 years. I sure hope you are right or you are costing me the differnce plus the 20 bucks I am sending you now.

Ahhh, now I see what you mean, I was looking dollar for dollar value. Let me think about this while I eat, check back in an hour...

WG

Rick Latona · 07-02-2003, 06:28 PM

Quote:

Originally posted by traffic addict
Hi Rick as you said

So here it is again just for you

The numbers that you see in my formula are present value, if you want to know the value in the end of the period you need to use a deferent Formula, but it doesn't mater any way, because you need to know what is the best offer, and the best way to check it out is by using the present value of the offer.

there is no logic in checking what will be the value of a in another 40 years and to comper it to the value of b in another 18 years.

You need to bring bouth offers to the same date, and that is why you are useing the present value formula.

you can trust me, I have an MBA from Wharton

Are you telling me that BlueDesignStudios is wrong? If a bank wanted to buy the contract, what would they pay if they wanted an 8% return?

BlueDesignStudios · 07-02-2003, 06:28 PM

Quote:

Originally posted by Rick Latona

I don't understand your formula but that is only because of my poor math skills. You certainly seem to be the only one that truely understands the question. So, if...

NPV A: $323,595.88
NPV B: $314,299.14

Then I would go with B because it comes in 18 years rather than 40 years. I sure hope you are right or you are costing me the differnce plus the 20 bucks I am sending you now. So, what's your addy?

You've almost got it

You would pick A though - what the NPV formula does is puts both income series into *present* values - so you can just compare one value to the other - without worrying about the time value of money.

I thought this question was a theoritical example? If this is a real life situation, then you have to take into account other factors:
- inflation
- interest rate risk
- & other more complex factors

If your question does have some real world significance, then I would like to explain my answer fully to you, to make sure you understand

rastakit · 07-02-2003, 06:31 PM

Quote:

Originally posted by traffic addict

nop, it is the present value, if you want to know the value in the end of the period you need to use a deferent Formula, but it doesn't mater any way, because you need to know what is the best offer, and the best way to check it out is by using the present value of the offer.

there is no logic in checking what will be the value of a in another 40 years and to comper it to the value of b in another 18 years.

You need to bring bouth offers to the same date, and that is why you are useing the present value formula.

you can trust me, I have an MBA from Wharton

Well, then with mine from USC I feel compelled to point out that you should advise our dear Rick of the sensitivity of Present Value to that discount rate...:-)

Cut that inflation/discount rate in half to 4% (as it probably should be) and A is a dramatic winner...at 8% it's close to a wash, as was mentioned...

Rick--what are you paying to get this deal? Perhaps the boys can work out the NPV and internal rate of return for ya...they seem to be chompin' for some math

Rick Latona · 07-02-2003, 06:32 PM

Quote:

Originally posted by BlueDesignStudios

You've almost got it

You would pick A though - what the NPV formula does is puts both income series into *present* values - so you can just compare one value to the other - without worrying about the time value of money.

I thought this question was a theoritical example? If this is a real life situation, then you have to take into account other factors:
- inflation
- interest rate risk
- & other more complex factors

If your question does have some real world significance, then I would like to explain my answer fully to you, to make sure you understand

This is a very real situation. One advantage of the longterm option is that the guy is more likely to default and return my assett! What's your ICQ?

traffic addict · 07-02-2003, 06:33 PM

Quote:

Originally posted by Rick Latona

Are you telling me that BlueDesignStudios is wrong? If a bank wanted to buy the contract, what would they pay if they wanted an 8% return?

for a they would have paid 26,830.38
and for B they would have paid 25,772.68

not a penny less and not a penny more

Rick Latona · 07-02-2003, 06:34 PM

Quote:

Originally posted by rastakit

Well, then with mine from USC I feel compelled to point out that you should advise our dear Rick of the sensitivity of Present Value to that discount rate...:-)

Cut that inflation/discount rate in half to 4% (as it probably should be) and A is a dramatic winner...at 8% it's close to a wash, as was mentioned...

Rick--what are you paying to get this deal? Perhaps the boys can work out the NPV and internal rate of return for ya...they seem to be chompin' for some math

I am selling something. Both are actually leases with a 500 dollar buyout at the end of the contract. The question is which offer to take for my assett.

Rick Latona · 07-02-2003, 06:35 PM

Quote:

Originally posted by traffic addict

for a they would have paid 26,830.38
and for B they would have paid 25,772.68

not a penny less and not a penny more

Not possible. Neither of those options equal one years worth of payments. Think about it.

traffic addict · 07-02-2003, 06:37 PM

Quote:

Originally posted by rastakit

Well, then with mine from USC I feel compelled to point out that you should advise our dear Rick of the sensitivity of Present Value to that discount rate...:-)

Cut that inflation/discount rate in half to 4% (as it probably should be) and A is a dramatic winner...at 8% it's close to a wash, as was mentioned...

Rick--what are you paying to get this deal? Perhaps the boys can work out the NPV and internal rate of return for ya...they seem to be chompin' for some math

All the other parameters are not relevant due to the fact that he will get 8% only on the ropi but not on the $ so the numbers aren't for real any way

Rick Latona · 07-02-2003, 06:37 PM

Quote:

Originally posted by Rick Latona

Not possible. Neither of those options equal one years worth of payments. Think about it.

It would be 10 times as much or more.

rastakit · 07-02-2003, 06:38 PM

Quote:

Originally posted by Rick Latona

I am selling something. Both are actually leases with a 500 dollar buyout at the end of the contract. The question is which offer to take for my assett.

I agree with Blue...A is the better option by a slim margin at 8%...but as I said, realistically inflation won't eat 8% of your yearly cash flows in the future...more likely 3-4% (long term bond rates)...which means A gets REALLY attractive...don't get suckered into B from the buyer, IMO...

Rick Latona · 07-02-2003, 06:39 PM

So what does Blue's numbers come to at 4%?

BlueDesignStudios · 07-02-2003, 06:40 PM

Quote:

Originally posted by Rick Latona

This is a very real situation. One advantage of the longterm option is that the guy is more likely to default and return my assett! What's your ICQ?

My ICQ is: 99438864

I just added you though you dont' seem to be on ?

AZBret · 07-02-2003, 06:41 PM

Quote:

Originally posted by Rick Latona
So what does Blue's numbers come to at 4%?

Option A = $538,356.76
Option B = $422,948.28

traffic addict · 07-02-2003, 06:41 PM

Quote:

Originally posted by Rick Latona

Not possible. Neither of those options equal one years worth of payments. Think about it.

this is for 40 months and 18 months of 8% per month.
there is no deferance in the end if you change it to 40 years and 18 years and 0.666% per month.
the decition will stay the same A is better then B

if you change it to 40 years and 18 years with an 8% per year then it is

NPV A: $323,595.88
NPV B: $314,299.14

but the decition that you need to take stay the same

rastakit · 07-02-2003, 06:41 PM

Quote:

Originally posted by traffic addict

All the other parameters are not relevant due to the fact that he will get 8% only on the ropi but not on the $ so the numbers aren't for real any way

You must have take Marketing classes in your second year...the 8% is a discount rate...he's not "earning" it...you use it to bring back cash flows into today's dollars...it's a proxy for inflation...get with the program...a string of payments of 27000 per year for 40 years is not worth less than one annual payment...

rastakit · 07-02-2003, 06:42 PM

Quote:

Originally posted by Rick Latona
So what does Blue's numbers come to at 4%?

Correct me if I'm wrong Blue..but at 4% it's A=$534K to b's=$417K...

So, I'd def go with the longer term...

BlueDesignStudios · 07-02-2003, 06:46 PM

Quote:

Originally posted by Rick Latona
So what does Blue's numbers come to at 4%?

Yeah rastakit - I get:

NPV A: $538,356.76
NPV B: $422,948.28

So once again NPV A seems a lot higher, $115,408.48 better off

however these numbers aren't really justified (i.e the 8% to 4%)

traffic addict · 07-02-2003, 06:47 PM

Quote:

Originally posted by rastakit

You must have take Marketing classes in your second year...the 8% is a discount rate...he's not "earning" it...you use it to bring back cash flows into today's dollars...it's a proxy for inflation...get with the program...a string of payments of 27000 per year for 40 years is not worth less than one annual payment...

the discount rate in this case is the same as the earnings. there is no info about inflation.
and as I explaind before the calculation were for 40 month and 18 month on an 8% per month that's why it is coming to about 20k and not 300k

Rick Latona · 07-02-2003, 06:47 PM

Quote:

Originally posted by BlueDesignStudios

Yeah rastakit - I get:

NPV A: $538,356.76
NPV B: $422,948.28

So once again NPV A seems a lot higher, $115,408.48 better off

however these numbers aren't really justified (i.e the 8% to 4%)

Blue you win the bet either way. But, everyone is I'm sure learning a lot here. I know I am. Which is a better offer? The question is now, what percentage do you use to determine the better deal? If you were selling something and had to choose between the two contracts, how can you tell?

vegas2003 · 07-02-2003, 06:48 PM

Quote:

Originally posted by Rick Latona
Ok,

The question is regarding the time value of money. I need to know which is more valuable, why and what formula was used to determine the answer.

A. 2,250 dollars a month for 40 years.
B. 2,750 dollars a month for 18 years.

Use 8% as an interest rate and tell me what each contract is worth today in a lump sum.

A is better

WiredGuy · 07-02-2003, 06:52 PM

Quote:

Originally posted by WiredGuy
Now some math:
Contract A: n = 40, P=27000, R=0.08
27000((1.08)^40 - 1) / 0.08 = $6,994,526

Contract B: n = 18, P=33000, R=0.08
33000((1.08)^18 - 1) / 0.08 = $1,235,858

These numbers are correct and can be verified by this tool:
http://www.pheaa.org/Forms_and_FAQs/form/fm2.shtml

Assuming the base amount saved per period was 27k/33k respectively, with interest computed annually at 8%.

This only indicates the total dollar amount of the contracts though over 40 years and 18 years respectively.

Say that contract A was 18 years as well, using the same math we figure contract A would be worth $1,011,156. So at the end of 18 years contract B is only worth about $200,000 more.

So at the end of 18 years, Contract B is worth more at $1.2MM by 200k over Contract A. So if you feel you can take that $1.2 MM at the end of 18 years and turn it into an additional $5.7 million over 22 years then Contract B is worth more. Otherwise, contract A will make $6.9MM over the course of the 40 year tenure and to me, I would rather pick contract A.

WG

Why · 07-02-2003, 06:52 PM

$1334726.6868868862005821541779953

is the value of the second option at the end of 18 years, if interest is compiled once yearly @ 8%

rastakit · 07-02-2003, 06:52 PM

Quote:

Originally posted by Rick Latona

The question is now, what percentage do you use to determine the better deal?

That is indeed the crux to any DCF question...is $2 tomorrow worth more than $1 today? Who knows?

The 30 year long bond today closed at 4.57%...might be a good place to start...

Rick Latona · 07-02-2003, 06:55 PM

Quote:

Originally posted by WiredGuy

These numbers are correct and can be verified by this tool:
http://www.pheaa.org/Forms_and_FAQs/form/fm2.shtml

Assuming the base amount saved per period was 27k/33k respectively, with interest computed annually at 8%.

This only indicates the total dollar amount of the contracts though over 40 years and 18 years respectively.

Say that contract A was 18 years as well, using the same math we figure contract A would be worth $1,011,156. So at the end of 18 years contract B is only worth about $200,000 more.

So at the end of 18 years, Contract B is worth more at $1.2MM by 200k over Contract A. So if you feel you can take that $1.2 MM at the end of 18 years and turn it into an additional $5.7 million over 22 years then Contract B is worth more. Otherwise, contract A will make $6.9MM over the course of the 40 year tenure and to me, I would rather pick contract A.

WG

Out of all do respect for a fellow Bobblehead, you don't understand the question. I'd be getting paid these amounts in exchange for an assett today. What are the contract worth in real money today is the question. And I think we know now. If you use an interest rate more than 9% B is better, 8% or less makes A better.

Why · 07-02-2003, 07:00 PM

$33,000 * 1.08 = $35,640
($35,640 + $33,000) * 1.08 = $74,131.2
($74,131.2 + $33,000) * 1.08 = $115,701.696
($115,701.696 + $33,000) * 1.08 = $160,597.83168
($160,597.83168 + $33,000) * 1.08 = $209,085.6582144
($209,085.6582144 + $33,000) * 1.08 = $261,452.510871552
($261,452.510871552 + $33,000) * 1.08 = $318,008.71174127616
($318,008.71174127616 + $33,000) * 1.08 = $379,089.4086805782528
($379,089.4086805782528 + $33,000) * 1.08 = $445,056.561375024513024
($445,056.561375024513024 + $33,000) * 1.08 = $516,301.08628502647406592
($516,301.08628502647406592 + $33,000) * 1.08 = $593,245.1731878285919911936
($593,245.1731878285919911936 + $33,000) * 1.08 = $676,344.787042854879350489088
($676,344.787042854879350489088 + $33,000) * 1.08 = $766,092.37000628326969852821504
($766,092.37000628326969852821504 + $33,000) * 1.08 = $863,019.7596067859312744104722432
($863,019.7596067859312744104722432 + $33,000) * 1.08 = $967,701.34037532880577636331002266
($967,701.34037532880577636331002266 + $33,000) * 1.08 = $1,080,757.4476053551102384723748245
($1,080,757.4476053551102384723748245 + $33,000) * 1.08 = $1,202,858.0434137835190575501648104
($1,202,858.0434137835190575501648104 + $33,000) * 1.08 = $1,334,726.6868868862005821541779953
$1,334,726.6868868862005821541779953

lets stop creating math problems that no one that didnt pass triginometry understand, get the old trust calculators and do the math.... you can see my math above, thats the value of the second option which would have less value at the end of its term then the first option would at the end of its term in today's money.

BlueDesignStudios · 07-02-2003, 07:03 PM

Well we don't know what the correct interest rate is to use, 8% is just a guess, rastakit's method is appropriate though perhaps not for this project.

So check out the effect of interest rate's on NPV's:

Interst % NPV A NPV B Difference
1 $889,834.37 $543,401.68 $346,432.69
2 $743,001.82 $498,489.04 $244,512.77
3 $628,518.97 $458,544.81 $169,974.16
4 $538,356.76 $422,948.28 $115,408.48
5 $466,614.65 $391,161.82 $75,452.84
6 $408,932.06 $362,719.16 $46,212.91
7 $362,067.39 $337,215.53 $24,851.85
8 $323,595.88 $314,299.14 $9,296.74
9 $291,692.03 $293,663.85 -$1,971.82
10 $264,972.13 $275,042.99 -$10,070.86

So you can see that NPV A is always better than NPV B as long as the interest rate is below 8% - and even if it jumps up to 9%, no big difference, but if it's 10 or above, B is much better than A

Why · 07-02-2003, 07:06 PM

if you want to see the full math for the first option i can do it up and present it for you, but its definately worth a lot more.

option A is worth $1,080,000 with out interest. via($2,250x12)x40

add in 40 years worth of compiled interest. and obviously option A is worth more.

Kimmykim · 07-02-2003, 07:10 PM

Quote:

Originally posted by Rick Latona

Blue you win the bet either way. But, everyone is I'm sure learning a lot here. I know I am. Which is a better offer? The question is now, what percentage do you use to determine the better deal? If you were selling something and had to choose between the two contracts, how can you tell?

The better offer is the one you are getting the biggest down payment on.

Geez.

Rick Latona · 07-02-2003, 07:18 PM

Quote:

Originally posted by Kimmykim

The better offer is the one you are getting the biggest down payment on.

Geez.

I knew I could count on your for advice. But, I though you would say the one who doesn't uncheck the sign me up for another 10 years box below the credit card field.

WiredGuy · 07-02-2003, 07:20 PM

Quote:

Originally posted by Rick Latona
I knew I could count on your for advice. But, I though you would say the one who doesn't uncheck the sign me up for another 10 years box below the credit card field.

Kimmykim · 07-02-2003, 07:21 PM

Quote:

Originally posted by Rick Latona

I knew I could count on your for advice. But, I though you would say the one who doesn't uncheck the sign me up for another 10 years box below the credit card field.

Dude, you know I am not much of a believer in the longevity of anything but dirt.

Thus my answer.

SweetT · 07-02-2003, 07:52 PM

While I am not a math whiz, I am pretty good at finding an angle to make a buck or two and I would be asking other questions....

1.) Does the asset appreciate or depreciate? If so, by how much?

2.) Can the asset be damaged by the leasee to the point of removing all value thus making payments for 24 months (by example) and then defaulting leaving you with an asset worth $0.00 and only 24 months worth of payments.

3.) Can any outside force make this asset less valuable by signing a law or losing a judgement?

If you answered in the negative to any of these issues then I would seriously consider getting as much of your money up front and/or as fast as possible.

So...in a word.....listen to KK

--T

dchottie · 07-02-2003, 07:52 PM

OK, I ran these two contracts using a basic amortization schedule *link to calculations at bottom* which is what is used by a lender when you purchase anything like a house or car or anything of substantial value or even when you get a loan. It shows you the principal amounts which for you would be the amount that they would be paying you for your "item". It shows what the total amount the person you're making the contract with will pay and what the breakdown is on that for total interest versus total principal.

The difference that you will be getting in the long run is quite substantial. You will get $1,080,500.00 if you go with the 40 year contract. You will only get $594,500.oo with the 18 year contract.

Now an 18 year contract consists of 216 months and if you look on the amortization of the 40 year note at the 216 month mark you will have received on this note up until that point $441,564.00. That is a difference of only $152,936.00. By this point the person that is leasing from you will have actually already paid the worth of the item that they are leasing. So, you are already $125,000 or so in the clear. If you go ahead an opt to take the contract for 40 years then everything from the 216 month point on is gravy. You are looking at an additional $486,000 in your pocket for taking the 40 year contract.

My suggestion would be, take the 40 year contract and then when you have received payment 305 which would be approximately 25 years and 4 months into the contract, take everything from payment 306 on and treat it as if you were never receiving it and put it into some strategic investments and turn the additional $486,000 into a hell of a lot more.

Basically, to put it in a nutshell, if you do the 40 year versus the 18 year you gamble on losing approximately $153,000 if the guy defaults at the 18 year mark. But you've already cleared the cost of the item you are leasing to him by $125,000. $153,000 seems like a small price to pay to more than triple that amount or with good investments the sky is the limit.

Amortization Schedule But Read the Text First

Kimmykim · 07-02-2003, 08:03 PM

Quote:

Originally posted by SweetT

So...in a word.....listen to KK

--T

LOL, who do you think I learned alot of this stuff over the years from my dear ;)

Rick Latona · 07-02-2003, 08:13 PM

Quote:

Originally posted by SweetT

--T

1.) Does the asset appreciate or depreciate? If so, by how much?

It appreciates.

2.) Can the asset be damaged by the leasee to the point of removing all value thus making payments for 24 months (by example) and then defaulting leaving you with an asset worth $0.00 and only 24 months worth of payments.

Possibly. But it is covered in the contract that they can't.

3.) Can any outside force make this asset less valuable by signing a law or losing a judgement?

Unlikely.

If you answered in the negative to any of these issues then I would seriously consider getting as much of your money up front and/or as fast as possible.

Did I answer those negativelly?

Chris Mallick · 07-02-2003, 08:19 PM

Rick, if you need a couple grand a month I am sure we can work something out

And, I am disappointed that you are paying the winner on PayPal and not ePassporte. (KK, I can't believe you missed this one...)

But seriously folks... there are not enough facts to determine which option is best. Risk is a prime factor. If the likelihood of collection decreases over time, you get as much as you can as quickly as you can. There's more, obviously, but if you give me all the facts (by email) I will give you my humble opinion.

C

PS: Asset is one ?t?, not two dude!

Monk · 07-02-2003, 08:37 PM

Use table 6-4 Present Value of $1

http://www3.interscience.wiley.com:8...aluetables.pdf

A. 2250 x 12months
= 27,000 / year
x 11.92461
= $321.964

B. 2750 x 12months
= 33,000 / year
x 9.37189
= $309,272

I didn't read all of the answers as they seemed long and boring but you can use the above Present Value table rather than crunching the numbers thru a formula

Rick Latona · 07-02-2003, 08:38 PM

Man, I got all the big boys out tonight. We are going to get this figured out for sure. Chris, you can bet your asset that I'm emailing you now.

SweetT · 07-02-2003, 08:39 PM

Quote:

Originally posted by Kimmykim
LOL, who do you think I learned alot of this stuff over the years from my dear ;)

Aw shucks, KK, I always thought it was the other way around

Quote:

Originally posted by Rick Latona
It appreciates.

Thats a positive !! (as long as you are absolutely positively sure that the asset cannot depreciate)

Quote:

Originally posted by Rick Latona
Possibly. But it is covered in the contract that they can't.

..that they can't what? Damage the asset? Default on payment? *ALL* contracts say that....enforcing it is a-whole-nother thing. Could I recommend getting a Certificate of Deposit as collateral for the purchase price?

"possibly" is an "almost" positive.

Quote:

Originally posted by Rick Latona
Unlikely.

"unlikely" is an "almost" positive.

So I guess you have no negatives....but it seems like you are selling DeBeers Diamonds, Gold Bars, or Crude Oil to be so sure of the future value of the asset....JMHO.

With more info I could give you a better answer.

--T

Rick Latona · 07-02-2003, 08:43 PM

Quote:

Originally posted by SweetT

"unlikely" is an "almost" positive.

So I guess you have no negatives....but it seems like you are selling DeBeers Diamonds, Gold Bars, or Crude Oil to be so sure of the future value of the asset....JMHO.

With more info I could give you a better answer.

--T

Check your email.

Rick Latona · 07-02-2003, 09:03 PM

I never imagined that this thread would be one post away from a third page.

07-02-2003, 06:16 PM	#52
BlueDesignStudios Confirmed User Industry Role: Join Date: Feb 2003 Location: Australia Posts: 9,492	Rick - did you see my explanation? __________________ Blue Design Studios - Adult Design Specialists! Email me for a free quote: [email protected]

07-02-2003, 06:39 PM	#70
Rick Latona The Best Ideas Start Here Join Date: Dec 2002 Location: Atlanta Posts: 6,037	So what does Blue's numbers come to at 4%? __________________ Regards, Rick Latona http://latonas.com Latona's - We Sell Money Making Web Properties Note to buyers of websites and traffic: please check our inventory at http://latonas.com/websites-for-sale. If you would like to make an offer on something, just let me know.

07-02-2003, 07:00 PM	#84
Why MFBA Industry Role: Join Date: Mar 2003 Location: PNW Posts: 7,230	$33,000 * 1.08 = $35,640 ($35,640 + $33,000) * 1.08 = $74,131.2 ($74,131.2 + $33,000) * 1.08 = $115,701.696 ($115,701.696 + $33,000) * 1.08 = $160,597.83168 ($160,597.83168 + $33,000) * 1.08 = $209,085.6582144 ($209,085.6582144 + $33,000) * 1.08 = $261,452.510871552 ($261,452.510871552 + $33,000) * 1.08 = $318,008.71174127616 ($318,008.71174127616 + $33,000) * 1.08 = $379,089.4086805782528 ($379,089.4086805782528 + $33,000) * 1.08 = $445,056.561375024513024 ($445,056.561375024513024 + $33,000) * 1.08 = $516,301.08628502647406592 ($516,301.08628502647406592 + $33,000) * 1.08 = $593,245.1731878285919911936 ($593,245.1731878285919911936 + $33,000) * 1.08 = $676,344.787042854879350489088 ($676,344.787042854879350489088 + $33,000) * 1.08 = $766,092.37000628326969852821504 ($766,092.37000628326969852821504 + $33,000) * 1.08 = $863,019.7596067859312744104722432 ($863,019.7596067859312744104722432 + $33,000) * 1.08 = $967,701.34037532880577636331002266 ($967,701.34037532880577636331002266 + $33,000) * 1.08 = $1,080,757.4476053551102384723748245 ($1,080,757.4476053551102384723748245 + $33,000) * 1.08 = $1,202,858.0434137835190575501648104 ($1,202,858.0434137835190575501648104 + $33,000) * 1.08 = $1,334,726.6868868862005821541779953 $1,334,726.6868868862005821541779953 lets stop creating math problems that no one that didnt pass triginometry understand, get the old trust calculators and do the math.... you can see my math above, thats the value of the second option which would have less value at the end of its term then the first option would at the end of its term in today's money. Last edited by Why; 07-02-2003 at 07:22 PM..

07-02-2003, 07:03 PM	#85
BlueDesignStudios Confirmed User Industry Role: Join Date: Feb 2003 Location: Australia Posts: 9,492	Well we don't know what the correct interest rate is to use, 8% is just a guess, rastakit's method is appropriate though perhaps not for this project. So check out the effect of interest rate's on NPV's: Interst % NPV A NPV B Difference 1 $889,834.37 $543,401.68 $346,432.69 2 $743,001.82 $498,489.04 $244,512.77 3 $628,518.97 $458,544.81 $169,974.16 4 $538,356.76 $422,948.28 $115,408.48 5 $466,614.65 $391,161.82 $75,452.84 6 $408,932.06 $362,719.16 $46,212.91 7 $362,067.39 $337,215.53 $24,851.85 8 $323,595.88 $314,299.14 $9,296.74 9 $291,692.03 $293,663.85 -$1,971.82 10 $264,972.13 $275,042.99 -$10,070.86 So you can see that NPV A is always better than NPV B as long as the interest rate is below 8% - and even if it jumps up to 9%, no big difference, but if it's 10 or above, B is much better than A __________________ Blue Design Studios - Adult Design Specialists! Email me for a free quote: [email protected]

07-02-2003, 07:52 PM	#91
SweetT Shank-A-Potamus Join Date: Jan 2002 Location: Atlanta, Georgia USA Posts: 1,756	While I am not a math whiz, I am pretty good at finding an angle to make a buck or two and I would be asking other questions.... 1.) Does the asset appreciate or depreciate? If so, by how much? 2.) Can the asset be damaged by the leasee to the point of removing all value thus making payments for 24 months (by example) and then defaulting leaving you with an asset worth $0.00 and only 24 months worth of payments. 3.) Can any outside force make this asset less valuable by signing a law or losing a judgement? If you answered in the negative to any of these issues then I would seriously consider getting as much of your money up front and/or as fast as possible. So...in a word.....listen to KK --T __________________

07-02-2003, 06:25 PM	#56
StripperBiz Registered User Join Date: Jun 2003 Posts: 58	OK A IS THE ANSWER THE MONEY IS BETTER IN YOUR POCKET. GET THE MONEY IN AND INVEST IT YOUR WAY. 40 YEARS IS A JOKE THAT WILL NEVER COME TO FRUITION. EVEN BANKS DON"T GO OUT LONGER THAN 30 YEARS. REMEMBER CASH IS KING AND FUCK EVERYTHING ELSE

07-02-2003, 06:52 PM	#81
Why MFBA Industry Role: Join Date: Mar 2003 Location: PNW Posts: 7,230	$1334726.6868868862005821541779953 is the value of the second option at the end of 18 years, if interest is compiled once yearly @ 8%

07-02-2003, 07:06 PM	#86
Why MFBA Industry Role: Join Date: Mar 2003 Location: PNW Posts: 7,230	if you want to see the full math for the first option i can do it up and present it for you, but its definately worth a lot more. option A is worth $1,080,000 with out interest. via($2,250x12)x40 add in 40 years worth of compiled interest. and obviously option A is worth more.

07-02-2003, 07:52 PM	#92
dchottie Confirmed User Join Date: Feb 2003 Posts: 894	OK, I ran these two contracts using a basic amortization schedule link to calculations at bottom which is what is used by a lender when you purchase anything like a house or car or anything of substantial value or even when you get a loan. It shows you the principal amounts which for you would be the amount that they would be paying you for your "item". It shows what the total amount the person you're making the contract with will pay and what the breakdown is on that for total interest versus total principal. The difference that you will be getting in the long run is quite substantial. You will get $1,080,500.00 if you go with the 40 year contract. You will only get $594,500.oo with the 18 year contract. Now an 18 year contract consists of 216 months and if you look on the amortization of the 40 year note at the 216 month mark you will have received on this note up until that point $441,564.00. That is a difference of only $152,936.00. By this point the person that is leasing from you will have actually already paid the worth of the item that they are leasing. So, you are already $125,000 or so in the clear. If you go ahead an opt to take the contract for 40 years then everything from the 216 month point on is gravy. You are looking at an additional $486,000 in your pocket for taking the 40 year contract. My suggestion would be, take the 40 year contract and then when you have received payment 305 which would be approximately 25 years and 4 months into the contract, take everything from payment 306 on and treat it as if you were never receiving it and put it into some strategic investments and turn the additional $486,000 into a hell of a lot more. Basically, to put it in a nutshell, if you do the 40 year versus the 18 year you gamble on losing approximately $153,000 if the guy defaults at the 18 year mark. But you've already cleared the cost of the item you are leasing to him by $125,000. $153,000 seems like a small price to pay to more than triple that amount or with good investments the sky is the limit. Amortization Schedule But Read the Text First __________________

07-02-2003, 08:19 PM	#95
Chris Mallick Confirmed User Join Date: Jan 2002 Location: Marina del Rey, CA, USA Posts: 679	Rick, if you need a couple grand a month I am sure we can work something out And, I am disappointed that you are paying the winner on PayPal and not ePassporte. (KK, I can't believe you missed this one...) But seriously folks... there are not enough facts to determine which option is best. Risk is a prime factor. If the likelihood of collection decreases over time, you get as much as you can as quickly as you can. There's more, obviously, but if you give me all the facts (by email) I will give you my humble opinion. C PS: Asset is one ?t?, not two dude! __________________ Chris Mallick [email protected]

07-02-2003, 08:37 PM	#96
Monk Confirmed User Join Date: Jan 2003 Location: Canada Posts: 631	Use table 6-4 Present Value of $1 http://www3.interscience.wiley.com:8...aluetables.pdf A. 2250 x 12months = 27,000 / year x 11.92461 = $321.964 B. 2750 x 12months = 33,000 / year x 9.37189 = $309,272 I didn't read all of the answers as they seemed long and boring but you can use the above Present Value table rather than crunching the numbers thru a formula

07-02-2003, 08:38 PM	#97
Rick Latona The Best Ideas Start Here Join Date: Dec 2002 Location: Atlanta Posts: 6,037	Man, I got all the big boys out tonight. We are going to get this figured out for sure. Chris, you can bet your asset that I'm emailing you now. __________________ Regards, Rick Latona http://latonas.com Latona's - We Sell Money Making Web Properties Note to buyers of websites and traffic: please check our inventory at http://latonas.com/websites-for-sale. If you would like to make an offer on something, just let me know.

07-02-2003, 09:03 PM	#100
Rick Latona The Best Ideas Start Here Join Date: Dec 2002 Location: Atlanta Posts: 6,037	I never imagined that this thread would be one post away from a third page. __________________ Regards, Rick Latona http://latonas.com Latona's - We Sell Money Making Web Properties Note to buyers of websites and traffic: please check our inventory at http://latonas.com/websites-for-sale. If you would like to make an offer on something, just let me know.