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Fix how ACE is handed in determining the required after-tax rate of return #370

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jdebacker opened this issue Jul 22, 2022 · 0 comments

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@jdebacker
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Currently, calcfunctions.calc_r has:

    r = (
        f * (nominal_int_rate * (1 - (1 - int_haircut) * u)) + (1 - f) *
        (E + inflation_rate - E * ace_int_rate * ace)
        )

It should be:

    r = (
        f * (nominal_int_rate * (1 - (1 - int_haircut) * u)) + (1 - f) *
        (E + inflation_rate - ace_int_rate * ace)
        )

The ace_int_rate is a parameter representing the rate at which the costs of equity can be deducted. It's something one might compare to E, but it is not a proportion of E.

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