Real world subsidized liners?

[AnotherDilbert]

By which I mean that isn't what the TMB says....

TMB?

Where did simple interest in Traveller come from?

CT Book 2, then every other edition of Traveller including Mongoose....

LBB does not specify how the interest on a ship's mortgage is calculated. Only the fixed payment schedule is specified, right?

If we used simple interest on an amortised loan, the amortisation amount would constant but the interest would be proportional to the remaining principal, hence the amount payed every month would decrease with time?

Traveller ship mortgages looks like a fixed rate payment mortgage, http://www.investopedia.com/terms/f/fixed-rate-payment.asp, note that the payment amount calculation is a typical compound interest calculation.

 

[Infojunky]

By which I mean that isn't what the TMB says....

TMB?

Traveller Main Book, Matt's favored nomenclature for the main rule book.

Where did simple interest in Traveller come from?

CT Book 2, then every other edition of Traveller including Mongoose....

LBB does not specify how the interest on a ship's mortgage is calculated. Only the fixed payment schedule is specified, right?

Nope straight out states Simple Interest. do note that that pair of paragraphs have undergone at least 6 interactions since they were 1st written. Also note that this topic has been discussed to death over the years in a surprising number of venues without any real change in how the rules are written. In that the Mongoose's editions are severely math Phobic there probable won't be any substantive change here. But, if you really want to dig into Traveller's underlying economics T4's Pocket Empires and GT's Freetrader are both good starts on the topic.

 

[phavoc]

Well, the loan a PC takes out for a starship is NOT an annuity, since he is the borrower. An annuity would be money flowing to a person, not from the person. To be fair I suppose you could possibly characterize it as an annuity, though I think that's a stretch of the definition. Annuities, at least here in US, flow TO a person, not FROM.

Interesting. I actually checked, wiki used "monthly home mortgage payments" as an example of an annuity.

What do you call a loan where you pay a fixed amount for a fixed period?

A loan. An annuity pays out. They can be structured with the same payment terms, but it's how and whom they are paid out that defines them. At least that's what we were taught in my finance classes when I was getting my MBA.

 

[steve98052]

I suppose any contract that requires equal recurring payments is an annuity, by some dictionary definition. But by customary usage, it's a contract where one pays money now, typically to an insurance company, and receives periodic payments later, either for a fixed number of payments (to your estate if you die before the payments run out), or for life (which is an unfortunate deal if you die early), or occasionally for life with an additional payment to your estate if you don't last long.

A mortgage is not an annuity by the customary usage, because the debtor can pay off the balance early without penalty, typically by getting a new loan at a better interest rate. The company that is contracted to pay an annuity can't change the terms of the contract, except sometimes under terms that are advantageous to the customer.

- - -

As for a starship mortgage, I think the idea that it's simple interest is silly. The idea that every starship mortgage follows the same terms is also rather silly. But for game purposes, for players in a group where no one wants to play realistic financing, it makes sense to describe a simple loan as a playability standard, with a small amount of description to describe the assumptions that should be followed for players who want to get more realistic.

 

[AnotherDilbert]

A loan. An annuity pays out. They can be structured with the same payment terms, but it's how and whom they are paid out that defines them. At least that's what we were taught in my finance classes when I was getting my MBA.

OK, you have proven me wrong. The word "annuity" cannot be used in this context. I will use the phrase "Fixed-Rate Payment Loan" instead.

The maths are, of course, the same.

 

[AnotherDilbert]

Nope straight out states Simple Interest.

TMB, p142:
The monthly repayments on a ship mortgage are easy to calculate. Start with the total purchase price of the ship being bought, then divide this amount by 240.
This is the amount that must be repaid every month for the next 40 years.

As far as I can see this is a "Fixed-Rate Payment Loan" (that uses compound interest).

How do you get this to be a simple interest loan? How do you calculate the effective APR?

 

[Condottiere]

My calculator says CrImp 5'368.22 for every million over three hundred sixty monthly repayments at five percent interest.

This equals CI 1'932'559.20, which seems near my rough estimation of doubling the cash price and dividing it by four hundred eighty.

 

[phavoc]

A loan. An annuity pays out. They can be structured with the same payment terms, but it's how and whom they are paid out that defines them. At least that's what we were taught in my finance classes when I was getting my MBA.

OK, you have proven me wrong. The word "annuity" cannot be used in this context. I will use the phrase "Fixed-Rate Payment Loan" instead.

The maths are, of course, the same.

Never said the math wasn't the same, just the terminology. You are, of course, free to use whichever labels you prefer.

 

[steve98052]

I came across another data point for classic Traveller interest rates. To buy a Travellers' Aid Society membership, as opposed to getting it as a mustering out benefit, costs Cr1000 000 (plus a roll). One benefit of TAS is a High Passage every other month. At the classic value of Cr10 000, that's Cr60 000 per year, or 6% of the purchase price. That's a great return in a noninflationary economy.

 

[Condottiere]

I don't think membership is transferable.

It will take you sixteen and two thirds years to recoup your investment; after that, it depends on how long you survive your retirement.