[quote=“Quarters”]My wife is translating a book into Chinese. She asked me for help with one paragraph, wanting me to simplify the English.
My brain really feels all twisted up when I try to reason this paragraph out. Your help is appreciated.
“The actual capital value of your brains may be determined by the amount of income you can produce (by marketing your services). A fair estimate of the capital value of your services may be made by multiplying you annual income by sixteen and two-thirds, as it is reasonable to estimate that your annual income represents six percent of your capital value. Money rents for 6% per annum. Money is worth no more than brains. It is often worth much less.”[/quote]
Here’s my attempt:
Your brains can be considered assets. As with any asset, a dollar figure can be attached. We can fairly estimate this dollar figure by reasonably assuming two things: 1) Your “brain assets” generate a rate of return each year and that is your annual income. 2) Money, an asset, is currently generating a safe rate of return at 6% by lending it out. Thus, we can reasonably conclude your annual income equals the 6% return from investing your brains. To then calculate how much your brains are worth, you would use the following equation: (annual income)/0.06 = 16.67*(annual income). In other words, your brains, as monetary assets, are worth sixteen and two-thirds of your annual income.