No Interest Option

[koolky]

Is it possible to make a restriction that would modify or eliminate the interest paid on company and personal cash? While playing certain maps for long periods of time I’ve noticed that the only thing keeping companies in business is the interest income. I would much rather play with no interest and find a way to make the company or map sustainable.

[Gwizz]

Yes,  you could use some math in the events to offset the interest owed or paid.  

It was along time ago and I don't remember exactly how I did it. 

I do remember I didn't think it was worth the trouble. 

 

There are members on the forum that should be able to help. 

[akuenzi]

Isn't there an inflation factor built into the game?  Does this have anything to do with the calculation of interest?  Maybe that only impacts revenues and costs...

 

Does anyone know what the interest rate actually is, or does it fluctuate depending on the economy?

[outofmage]

That's why the game is usually limited in 20 or 30 years. After that, you will have too much money, and with that kind of money, you don't need to do anything to keep a company alive. If you like to continue playing after winning a prize, which is very common among the old players, because we need to extend the game as much as possible to experience something new. I suggest you to pay dividend. You can reduce the cash holding by company to a point when railroad operational profit takes back the major part of your total profit against the interest revenue just like in the early stage of the game. You can force yourself to pay dividend just like the debt owner forces you to pay interest. After all, for a sustainable business, stock dividend and bond interest are not that different.

 

I believe a company should be a pure source of profits from railroad industry, not a bank account. If you don't pay dividend, well, actually you should do, only because you reserve the profits to invest and expand to get more dividend later. If you don't need capital to invest, pay your share holders.

 

If you valid my idea, you won't ask for a "no interest option", because you already have the "no dividend option".  Lower interest actually means lower efficient use of money. No interest means zero efficient of capital, and I don't like this idea.

[MaglevForever]

outofmage, good post. If you play the US History scenario which is really long 150yrs, you need the interest income to try to stay alive when you are taxed that heavily. That is the only case I can think of where it is necessary.

 

Yes, the interest rate fluctuates with the economy. All rates are tied to the prime rate.

 

Another idea is to make an event to drop the prime rate after the first 25-30 years are up. This wouldn't work perfectly but you could pretend it was an inflation tool. You can drop it as much as you like and that will actually push the rate your company receives into negative numbers. So you would PAY for having too much money in the bank. If you were clever and got yourself into a big hole of debt it would give you some "government assistance". Note: I don't think this affects the personal rate the player receives.

 

There is no factor for inflation in the game. If you look in the wishlists thread you can see a couple of people posted wishing for it (including me).

 

As far as I know the rate a company receives on positive cash is the same as you receive on a positive personal cash balance. This rate is visible in the Finances tab of the company book. This rate seems to be 4% less than the prime rate.

 

When a company has a negative cash balance the rate it pays is also based on the prime rate but my guess is it must factor in credit rating too. I don't know that players have a personal credit rating. I don't know hard facts, but it seems that the player pays a lot less interest than a company does.

[jeffryfisher]

Interest rate fluctuates with the economy, so no one setting will peg rates at zero unless you also do something to peg the economy. Therefore, if you also run an annual event to move the economic level, then you could achieve some predictable interest rate stability.

 

F'rinstance: At the start of a scenario, trigger an event to lower the prime by 2 points. I think that would put interest earned at zero during a boom. Also have a +1 economy event trigger annually. Over time, the economy will run up to boom and stay at boom or prosperity indefinitely. That means that interest will be 0 or 1% for the duration of the scenario.

 

Build the rest of the scenario around those factors (i.e. Do something to balance the flood of cargo and high payoffs).