(1) Growth rates are calculated assuming a geometric series of
the standard form a(1+r)
n,
where a is the initial member of the series, r is the growth rate as a
decimal and n is time passed in years. In cases where the inital series
member is zero, rendering growth calculation impossible, the first
three series members are examined for non-zero value. If all are zero
the figure "1111111" is reported. If the final series member is zero
"1111111" is reported.
(2) Straight-line depreciation is used. A depreciation schedule is
developed by calculating the yearly depreciation on each new capital
equipment investment at the rate specified by the user. Thus, if a 10%
depreciation rate is specified, the depreciation period is 100/10 = 10
years and the yearly depreciation for each new yearly capital equipment
investment is 10% of the investment for the next 10 years. Similarly,
for a 5% depreciation rate the yearly depreciation for each new yearly
investment is 5% of the investment spread out over 20 years from
the date of the investment. In case of non-integer depreciation
periods, the remainder is calculated proportionally. Once the
depreciation period expires the investment is considered written off,
and income from it also falls to zero. The initial
starting capital (if any) is similarly depreciated.
(3) The entire population automatically earns a subsistence income.
Above this, income is earned yearly from capital equipment until it is
written off. For each new yearly capital equipment investment an income
schedule similar to the depreciation schedule above is calculated. The
return on investment multiplied by the investment is the annual income earned
by that investment for the duration of the depreciation period, after
which income falls to zero when book value falls to zero. Thus, if 5%
depreciation is specified and a 10% return on investment, the income
earned on each new capital equipment investment is 10% of the value of
the investment for a period of twenty years. In other words 200% of the
value of the investment is recovered as income. Thus depreciation and
return on investment are directly comparable, one on the minus side,
the other on the plus. Salvage income and operating income after
write-off are assumed zero. It could be argued that this somewhat
biases the game against growth.
(4) A portion of annual income is reinvested (the investment rate).
Each new yearly capital investment adds to the current capital stock
and contributes to the depreciation schedule and the income schedule as
outlined above. Capital is assumed held communally and income divided
equally among the village's population.
(5) Population growth rate is birth rate minus death rate. Only the
difference between the two is used. Thus, for the purposes of the
program 15% / 12% birth rate / death rate is identical to 4% / 1%.
Migration is assumed zero.