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It's Only A Game

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Partial screenshot of a Let's Play by YouTuber PotatoMcWhiskey of Civilization VI: Gathering Storm by Firaxis
THE SCENARIO I was watching a Let's Play of Civilization VI on YouTube earlier this week, and during the video, the player (PotatoMcWhiskey, or Potato for short) discovered that he could effectively lend money to the computer-controlled Mapuche nation, and was trying to figure out what his ROI would be... using division rather than financial math. This is completely understandable because the Time aspect is a bit blurry (the game works in Turns, only loosely connected to months and years) and also most people don't know how to use financial calculators. But when I see situations like this come up in 'real life', I like to take the opportunity to write them up in Money Blog posts. So here we are. The deal was this: Potato lends 309 gold coins to Mapuche this turn, and in return, Mapuche pays Potato 17 gold coins per turn for 30 turns. Potato made sure he had an alliance with the Mapuche so they couldn't cancel the payments by declaring war, and Mapuche wasn't in danger of being conquered, so the income was secured. So let's adapt this deal to a real-life dollars and timeframes, and figure out what our ROI would be. The question: If Potato lends the Mapuche nation $309 today, and Mapuche pays Potato back $17 per month for the next 30 months, what's Potato's annualized ROI?
THE SOLUTION This one is very straightforward. First things first, make sure the calculator is using 12 Payments per Year. N: 30 (Mapuche's paying Potato for 30 months) I/YR: (This is what I'm trying to find) PV: -309 (Potato is lending Mapuche $309) PMT: 17 (Mapuche pays Potato $17 per month) FV: 0 (At the end, the deal is done and Mapuche doesn't owe Potato anything more)

If he did this kind of deal, Potato would receive an annualized return of 43.13%.

Naturally, if we were to change the problem so that Mauche pays Potato $17 per year instead, Potato's return would plummet. Maybe we'll talk about that in a future Money Blog post.

What do you think? Was this a good deal? Was it too good a deal, and the trading AI needs some work? Would you have loaned the money at these terms? Let us know in the comments!