An easy way to think about the value of something that generates $10,000 profit per year is to ask what another asset would cost that generates the same revenue. For example, how much would one need to invest to generate $10,000 per year? The answer depends on what rate of interest you're earning on your investment.

    Suppose you can earn 10% (for simplicity), how much would you need to invest to earn $10,000 each year? Let V be the total investment then we can find V by solving

V x 0.1 = 10,000
      V = 10,000/0.1
      V = 100,000
So an asset that pays $10,000 a year forever is worth about $100,000 if interest rates are near 10%.

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