Yokuz116

05-09-2011, 05:50 PM

Now, in chapter 2, there is a car billboard that says "Car of the Year," for sale for $6,000,000. Now, using a simple time-value of money calculation, and using average inflation of the U.S. market (about 3%), and using an average of $20,000 for the price of a new car, I calculated that the setting of Enslaved is 193 years in the future, which would make it the year 2204.

Let's see if I can do this.

We want to know how long it would take $20,000, at an interest rate of %3 (.03 (inflation)) to turn into $6,000,000. To find the number of periods (years, for our purposes) in a TVM (time-value of money) calculation, we use the formula:

N = ln(FV/PV)

ln(1+i)

FV = future value = $6,000,000

PV = present value = $20,000

i = interest rate = .03

N = periods = years

ln is the natural logarithm

So, plugging in the numbers, you'll get roughly 193-194 years.

You may be thinking that $20,000 is relatively cheap for the price of a new car today, and that the inflating price of cars is not parallel to that of general inflation--I know all this. But these variables are too strong to accurately speculate with. I'm doing what I can with the tools I have, and doing it in a conservative way.

If the price of cars increases at a faster rate than the price of inflation, then the year of Enslaved would be earlier, as well as if I started with more than $20,000 for an average car, the FV would be attained sooner, thus also making the year earlier. But, like I've said, I'm trying to be conservative. I may do some research on the general trend of car prices and tweak the formula for a more accurate result, but this is a start. I hope everyone finds this interesting. Isn't math fun!? =)

Let's see if I can do this.

We want to know how long it would take $20,000, at an interest rate of %3 (.03 (inflation)) to turn into $6,000,000. To find the number of periods (years, for our purposes) in a TVM (time-value of money) calculation, we use the formula:

N = ln(FV/PV)

ln(1+i)

FV = future value = $6,000,000

PV = present value = $20,000

i = interest rate = .03

N = periods = years

ln is the natural logarithm

So, plugging in the numbers, you'll get roughly 193-194 years.

You may be thinking that $20,000 is relatively cheap for the price of a new car today, and that the inflating price of cars is not parallel to that of general inflation--I know all this. But these variables are too strong to accurately speculate with. I'm doing what I can with the tools I have, and doing it in a conservative way.

If the price of cars increases at a faster rate than the price of inflation, then the year of Enslaved would be earlier, as well as if I started with more than $20,000 for an average car, the FV would be attained sooner, thus also making the year earlier. But, like I've said, I'm trying to be conservative. I may do some research on the general trend of car prices and tweak the formula for a more accurate result, but this is a start. I hope everyone finds this interesting. Isn't math fun!? =)