Serious question: If I wanted to buy 10% of your income for the next 10 years (let's assume this was possible pre-tax), how much would you charge me in up-front cash for that?
-
-
Yes. However I’m assuming your question has relevance to
@LambdaSchool and the 10% would come from my income on an annual basis correct? -
Only vaguely related
-
If you wanted 10% of my income for the next 10 years up front, I would charge you 2.5% maybe 3% interest for cost of capital semi-annually then expect the principal at the end. I would stay that low on the interest because I am protected if my income increases.
-
No one would charge an upfront amount to borrow 10% of their income times 10. You are open to inflationary risks taking an upfront payment.
-
So basically you'd take the bet that your salary isn't going to increase much
-
The opposite. I know my salary will increase over 10 years so I would rather give you all 10% up front not over 10 years. That protects any wage increases I receive from you, the borrower.
-
No you have it backwards. I'm writing a check to you. Today. In exchange for 10% of your future earnings. How big does that check have to be?
-
Oh ok, I apologize. I would calculate, to the best of my ability, the present value of those future earnings at the 10 year US bond rate. Assume you get a total of 100k over 10 years from me. I would charge you about 78k.
End of conversation
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.