You should try to figure out why the equation makes sense for yourself.
I dislike “It is left as an exercise for the reader”. I don’t know why there’s a factor of g-1 in the equation. It’s likely I will never have the time to check this post again; so you may have lost your one chance to convince me that it’s correct.
I sometimes avoid revealing an answer in a post, but only when it’s either a teaser for a future post, or when I want the reader to guess first because I want their guess to be used as evidence.
I think it comes from the units in the definition of g:
(For example, if working on improving their tools currently offers the software developer the opportunity to improve their wealth creation skills at a rate of a 50% increase in their ability per year, their growth factor would be 1.5.) We’ll call that g for growth.
At that point, you’ve accounted for current present value of your current skills, but now you want to add in the value of future growth. The ‘1’ in ‘1.5’ is what you have now, and is always what you have now by definition; the ‘.5’ is additional growth. To remove what you already have, you do ‘-1’. Hence you multiply by ‘g-1’
Great observation! But...
I dislike “It is left as an exercise for the reader”. I don’t know why there’s a factor of g-1 in the equation. It’s likely I will never have the time to check this post again; so you may have lost your one chance to convince me that it’s correct.
I sometimes avoid revealing an answer in a post, but only when it’s either a teaser for a future post, or when I want the reader to guess first because I want their guess to be used as evidence.
I think it comes from the units in the definition of g:
At that point, you’ve accounted for current present value of your current skills, but now you want to add in the value of future growth. The ‘1’ in ‘1.5’ is what you have now, and is always what you have now by definition; the ‘.5’ is additional growth. To remove what you already have, you do ‘-1’. Hence you multiply by ‘g-1’
Oh, right. I was forgetting he defined g that way. Thanks!