Free Republic
Browse · Search
General/Chat
Topics · Post Article

To: Lonesome in Massachussets

Great analysis. Since inflation obviously has an enormous effect on infinite term debt securities, another useful formula is for the present value of a perpetuity like this one when corrected for inflation. In this case, the present value is equal to the payment divided by the difference between the interest rate and the inflation rate, assuming that the first payment is received at the end of the first period. There are some elegant mathematical derivations of this interesting limit of an annuity.


28 posted on 12/17/2024 4:54:22 AM PST by Ronaldus Magnus
[ Post Reply | Private Reply | To 8 | View Replies ]


To: Ronaldus Magnus

I am an electrical engineer (EE) by training. Most EE’s my age think the two most useful real world courses they took were Mechanics 101 (Statics) and Engineering Economics. Mechanics 102 (Dynamics) is probably useful, but too difficult to apply to everyday problems. Statics tells you how to build a bridge (not a common task), hang a picture, install a shelf or a deck. Engineering Economics teaches you to derive and use compound interest formulas. to think about economics probabilistically, to understand insurance and annuities.


29 posted on 12/17/2024 5:37:05 AM PST by Lonesome in Massachussets
[ Post Reply | Private Reply | To 28 | View Replies ]

Free Republic
Browse · Search
General/Chat
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson