If you gave out 100B in loans...... (White Giant)

Say if you gave out 100B in loans!

And the person gave the country 1 month to pay it back

how much interest income would he make?

(Also the country next to me done the above)

Next to nothing.

Interest rate is 15% per real year I think, so there is really no point. Loans were used by many players as a way to get around the monetary 'restrictions' the GMs imposed, but that has since been abolished.

I see that the interest on a given loan is 12% for a REAL YEAR!, not a game year. Therefore, if I gave a loan of 100B today, it would take 91 game years to earn my 12% (12B). (3 game months per real day = 21 game months per real week x 52 weeks = 1092 game weeks = 91 game years)

To earn 1% interest (1B from 100B), it would take 1 real month which is equal to 84 game months which equals about 7 game years.

Now, for 1 game month, the interest would be 1 divided by 84 as it takes 84 game months (1 real month) to earn 1% of your 100B, which is 1B.

Therefore, the interest for 1 game month is equal to 1/84 of a Billion (1,000,000,000).

1/84 of 1B is.......11,904,761.90

Nearly 12 million, not bad.

If you loan out, say 1000B (1T)....you will gain a return, each game month, of 120million. Scaling up.....10T in loans will earn you 1.2B per game month.

And, if you are lucky enough to have 100T to splash about, which I very much doubt it......12B per game month can be yours....

In theory of course.

And that absurdly low interest rate is part of why players have been willing to rack up debt in this game. Perhaps, if the GMs raised interest rates, they wouldn't find themselves having to put limits on absolute debt levels.

Some weird math there Gary.

6 game months per day = 2190 game months in a real year.
12% of 100T = 12T.
12T/ 2190 = 5.48B ( a game month )

Ok, this is assuming no such complications like compound interest or early repayment penalties.

You haven't got 100T to splash about???

I see what you've done, 3 months per day. Does any world run that speed? WG?

yes....on wg we have 3 game months per day! Im sure my math is good, I spent a good hour checking it. I would be grateful if someone else would check.

In that case we are not far apart, mathematically speaking...

Damn, didn't realise WG still crawls along at that rate, only world I dont play.

Interest rates have to be accumulative to be able to reach 12% and being paid out each month.

Using 1,092 game months in a RL year (I suspect 1,095 actually if it is 3 game months per day), it is the 1,092nd route of 1.12 = 1.0001037862 ......

For 100B, this equates to 10,378,623 in interest per game month.

No Garry, WG was increased to 4 months per day quite a while ago. Check the game news for April 13th 2011. There are no worlds running on 3 months per day any more, more's the pity.

Perhaps this will help the calculations: I have 70T out in loans and am making 5.9B per game month in interest. On White Giant.

Hugs and respect

Jo

For 4 months per day, this is 7.76m of interest per game month for a 100B deposit.

As I understand it, the rate of interest, which is 12% per Real Year on White Giant should be divided by the number of game months per Real Year. As there are 4 game months per day, then 4 game months per 365 real days, gives us a total of 1460 game months per Real Year.

Therefore, 12% divided by 1460 game months, gives us an interest rate of approximately 0.008% (rounded up). Depending on what loan you have offered, you should earn 0.008% every month, which would eventually result in a 12% interest if the loan is available for 1460 game months (This equates to approximately 121.67 game years!)

Now, based on a loan of 100B, the interest will be 12B over a real year or 1460 game months. However, as I only want to give the loan for 1 game month only, the return will only be 1/1460th of 12B. 12B divided by 1460 = 8,219,178.08.

Scaling up, a 1T loan, which should earn 120B over a Real Game year, will earn you 82,191,780.82.

Now, going on the example provided by Jo:-

12% of 70Trillion is 8.4 Trillion;

8.4 Trillion/1460 is 5.75B (rounded up). This is close enough for me.

So, the equation to calculate a months worth of interest on a loan is:

((value of loan x 1.12)- value of the loan) / number of game months in a real year = value of interest earned during 1 game month.

Eureka!

LOL, which can be simplified as:

((V x 1.12)-V) / number of months in real year =

(1.12V - V) / n =

0.12V / n.

where V = loan value, n = number of game months/real year

so, 12% of loan value spead over n...

Took a lot of work to get to that conclusion

Thanks Crafty. I was attempting to be........ very descriptive with my answer in relation to Peter465092's original question!

I'm hoping Peter465092 will comment on and appreciate our hard work , in relation to his original question, the answer to which of course is

8.22Million.

;-)

Heh, we are both probably wrong Garry!

I have just presented White Giant with a 2T loan for 120 months.

This should mean aroud 164 million per game month. Over 120 game months, I should gain 19.728 Billion.

That would get me a cargo shuttle with some spare change.