Yes! I agree. To summarize my latest interpretation, I think PV for the income (nominal $ since NON-COLA) uses NPV formula in Excel with inflation (=NPV(0.03,65K,65K,...,65K) while expenses are in real $ and are just summed ($50K * 30)
I did quick calculations in a spreadsheet.
In the year 2053:
Income = $27.6K (in 2024 $) = $65K (in 2053 $)
Expenses = $50K (in 2024 $) = $117.8K (in 2053 $)
$65K/(1.03^29) = $27.6K
$50K*(1.03^29) = $117.8K
I have the present value of the income for the 30 years from 2024 to 2053 as $1,312,250 ($65K + $65K/1.03^1 + $65K/1.03^2 + ... + $65K/1.03^29)
I have the present value of the expenses for the 30 years from 2024 to 2053 as $1,500,000 ($50K * 30).
So, about 87.5%, though this assumes that the surplus from earlier years doesn't grow. The surplus would be depleted around 2041. I think you'd need a return of around 10.2% on those assets to deplete the surplus in 2053.
Statistics: Posted by insaneoctane — Tue Sep 10, 2024 2:13 am — Replies 5 — Views 237