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itaewonguy
Joined: 25 Mar 2003
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Pluto
Joined: 19 Dec 2006
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 Posted: Thu Jul 03, 2008 9:06 am Post subject: |
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Actually a $400M payout over 8 years, assuming a 4% inflation rate, would have a present value closer to $362, 580,000. Still, it's a lot of effing money and I would certainly like to have such a nice pay day. Good for him 
Last edited by Pluto on Thu Jul 03, 2008 8:44 pm; edited 1 time in total |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Thu Jul 03, 2008 9:49 am Post subject: |
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The story says that Rush will receive $400 mil over through 2016 including $100 mil payable now as a signing bonus.
That leaves approx $300 mil over 8 years or an estimated $37.5 per year.
Using 100 now and 37.5 per year and 4% the PRESENT VALUE would actually be approx:
$362, 580,000.
The present value of a stream of future payments is less than the stated nominal amount, not more. |
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Pluto
Joined: 19 Dec 2006
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| Posted: Thu Jul 03, 2008 10:12 am Post subject: |
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| ontheway wrote: |
The story says that Rush will receive $400 mil over through 2016 including $100 mil payable now as a signing bonus.
That leaves approx $300 mil over 8 years or an estimated $37.5 per year.
Using 100 now and 37.5 per year and 4% the PRESENT VALUE would actually be approx:
$362, 580,000. |
Hmmmm.... That does sound closer to the real number. I also missed the $100m signing bonus. Oh well, bored at work and diking around with excel and I did miscalculate. Still a lot of money though. I can't wait for the day when I can calculate all of these NPVs in my head and just abandon spreadsheets altogether... Practice makes perfect I suppose
I also set t = 12*8=96 and r = .04/12 = .oo33 so I tried to do it on a monthly basis as opposed to a per annum basis. Though I would suspect your number would still be closer to my miscalculation.
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| The present value of a stream of future payments is less than the stated nominal amount, not more. |
You're right! LoL, found my problem. I set C = 800m instead of 400m. That was the reason for the high number. |
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RufusW
Joined: 14 Jun 2008
Location: Busan
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