ST Alpha - "Why can't you say: I will have $10 in my account in 5 years. For me to get $10 in 5 years, I would need $9.06 in my account at 2% interest." (Reading a Post)

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In response to "it's the annual value of the next-best investment of the cash. " by amanda "internet" jones

Why can't you say: I will have $10 in my account in 5 years. For me to get $10 in 5 years, I would need $9.06 in my account at 2% interest.

Posted by James Bond (aka Igor) (aka Igor) Feb 9 '11, 17:10

Interest isn't 2% but lets just assume.

So if I am not getting the $10 in 5 years, then I don't have $9.06 today.

Responses:

sure, you can. but what interest rate do you use? isn't that what you asked? - amanda "internet" jones Feb 9, 17:19 7
- Oohhhh.. I see now. Sorry I got confused. You used the interest rate from credit cards. While I was thinking of an like a CD account. - James Bond (aka Igor) Feb 9, 17:23 3
  - so like what I'm saying is "what would you get for the money if not spending it on tuition and interest? -- nm - amanda "internet" jones Feb 9, 17:24 2
    - Right. Thank you. -- nm - James Bond (aka Igor) Feb 9, 17:25
    - oops. it's a combination of the cost of your debt and your equity. I use credit card rates for me. YMMV. -- nm - amanda "internet" jones Feb 9, 17:25
- just give him the bottom line! -- nm - cupixie Feb 9, 17:20 2
  - he's using like a bank interest rate. he has his answer. I use different numbers because I make different assumptions and have different risk toleranc -- nm - amanda "internet" jones Feb 9, 17:22 1
    - Yes, makes sense. Thank you. -- nm - James Bond (aka Igor) Feb 9, 17:24

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