Balancing Debt, Risk, and Practice Growth
Dr. Sharma is burdened with $280,000 in student loans and wants to aggressively invest while making payments. With an AGI of $350,000 and also managing her practice's finances, Anya struggles to determine the appropriate discount rate for evaluating potential investment opportunities, particularly considering the current inflationary environment and the need to balance debt repayment with wealth accumulation.
Using the Discount Rate Calculator with the CAPM model, Anya inputs her risk-free rate (using current treasury yield), beta (based on selected investments), and expected market return. This helps her determine that she needs an expected 12% return on her growth stock portfolio to justify the risk. She also uses the Gordon Growth Model to evaluate dividend-paying stocks, ensuring the present value of future dividends compensates for the risk involved in deferring loan repayment.
Anya regularly updates the calculator's inputs based on current market data and her evolving financial situation. She also cross-references the results with other portfolio analysis tools to ensure consistency and accuracy in her investment decisions.
$35,000 projected increase in investment returns over 10 years
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