| Topic Name: |
Greed |
| Message Name: |
You don't present va |
| Date Posted: |
05/17/2000 |
| In Reply To: |
No, calculating the present value of your future stream of savings wouldn't make sense. The entire point of this calculation is to figure out how much we will be worth in 10 years. NOT, how much our future stream of earnings is worth today. To calculate how much we will hopefully be worth in 10 years. Calculate the future value of the stream of your expected earnings, using whatever appreciation rate you feel you can earn. I personally would suggest 15%, but this is just me. Then calculate the present value of this lump sum, discounted at whatever you feel the average rate of inflation will be over the next 10 years. This will give you a rough estimate of how much you will hopefully be worth in 10 years, in terms of current dollars. I hope this helps. BTW, this is a student who will be a junior following this summer, posting. Best of luck to all! |
| Message: |
You don't present value it back at the rate of inflation, you net your expected inflation rate against your expected appreciation to come up with a "net" expected growth rate - and calculate FV against that! Hope you take some more finance courses, chief.
|
|
