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Strategies & Market Trends : Group Therapy -- Ignore unavailable to you. Want to Upgrade?

To: E. Graphs who wrote (3452)	4/30/2001 11:22:53 PM
From: Duane L. Olson	Respond to of 4564

E! I've started doing a little research on all those, but what I understand of the US royalty trusts, I find reasons to like ERF and NCN somewhat better. One reason is because of the method of computing the current (present) value of the trust assets: the US trusts use an annual discount rate of 10%, while the Canadians use 12%. As you might imagine, this makes an enormous difference over long periods of time (Eg. $1,000 at 10% over 30 years becomes $17, 449, whereas $1,000 at 12% over 30 years becomes $29, 560) . Doing the reverse, using a higher discount number makes distant values appear proportionally smaller. Canadian valuations on their trusts, in other words, are an understatement, compared with comparable US trust valuations. We have reason to like our ERF and NCN --- if we didn't already know that <GG> tso