03-19-2018, 08:25 PM
(03-19-2018, 05:42 PM)taylortbb Wrote:(03-19-2018, 05:36 PM)creative Wrote: Mortgage payments plus down payment does add up to the ultimate cost of a house.
They do, but unless you inflation adjust the numbers they're pretty misleading. While financing cost might take ION capital over $1B in long term total dollars, I seriously doubt it does in 2018 dollars. The region only had Grandlinq finance about $100M of the project, so even over 30 years I doubt the interest tripled that expense, especially at the low rates they would have received.
Even with inflation adjustment one doesn’t get to count the interest costs as part of “the cost” of a project one doesn’t happen to like. If people are talking about buying houses and how much they paid, they talk about the number on the agreement of purchase and sale. How they got that money is a separate issue — from personal savings, using a mortgage, or whatever. The cost of a sweater is what the cash register receipt says, not the total of all the credit card interest payments. And so on.
If future payments are counted in the cost, then the value of the project after the time period needs to be subtracted off the cost. There is no justification to rule that an interest payment 29 years 11 months from now counts towards the cost but the salvage value of the system 30 years from now doesn’t count against the cost. By this standard the cost probably could be argued to be negative, although it would be dependent on how valuable one thought the system would be 30 years later so any discussion about this number would be inconclusive.
When people talk about “the cost” of something they mean how much it would cost to build it or pay for it in cash. Anybody discussing the cost in good faith will make it very clear if they are talking about something different.