Quantitative supply and demand model based on infinite spreadsheet

• US 6,078,901 A
• Filed: 04/03/1997
• Issued: 06/20/2000
• Est. Priority Date: 04/03/1997
• Status: Expired due to Fees

• Current Assignee: Hugh Ching
• Original Assignee: Hugh Ching
• Inventors: Ching, Hugh
• Primary Examiner(s): Stamber, Eric W.
• Assistant Examiner(s): Irshadullah, M.
• Application Number:
  US08/834,741
• Time in Patent Office: 1,174 Days
• Field of Search: 705/4, 705/8, 705/35, 705/36, 395/208, 395/236, 395/500, 273/240
• US Class Current: 705/36.00R
• CPC Class Codes: G06Q 10/06 Resources, workflows, human or project management; Enterprise or organisation planning; Enterprise or organisation modelling
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

Calculating devices for non-arbitrary price determination and rational decision making. The historical problem of value has been solved in this invention. The solution represents the first major breakthrough in social science. Value is defined as the sum total of all the future benefits and losses. An infinite spreadsheet establishes a deterministic relationship--described by an equal number of equations and unknowns--between the price and all the factors affecting the price in an expected time space extending from now to the infinite future. The infinite spreadsheet expands the current finite spreadsheet to infinity. It does not assume a resale price in the determination of the price. The current finite spreadsheet for planning and decision making should not be allowed because it hides material information, namely, the future beyond the finite time. The scientific method based on empirical verification is not always applicable in social science. In particular, the solution to price cannot be empirically verified because deterministic sets of data can never be collected when the infinite future, which will never arrive, is involved. In order to carry the calculation to infinity, the inputs are expressed as approximate time-invariant variables. Since the present price depends on the future price, the calculation is done in a time-reversed fashion. The law of supply and demand, or the general economic equilibrium analysis, emphasizes the spatial dependence of the price and has neglected the importance of the temporal consideration, which is investigated in detail in the infinite spreadsheet. A quantitative supply and demand model for multiple commodities with similar functionality and with a uniform price can be constructed by summing over the quantities whose various prices are determined individually by the infinite spreadsheet. In turn, the quantitative model can be used to obtain the inputs for the infinite spreadsheet, with which it forms a new quantitative foundation for economics and ushers in a new age of social science.

Claims

1. A process for determining a real estate or business price using an infinite spreadsheet involving a plurality of buyers each occupying a finite duration (investment period) on said infinite spreadsheet and each having a price and a resale price for each finite duration, the process comprising the steps of:

a) Choosing a set of initial input values of financial factors in the determination of the price of the real estate or business for the determination of the cash investment return, which is equal to the cash flows plus the cash from resale;

b) Projecting the net income to the last or Tth year where T is finite and an integer multiple of a constant investment period or equals the sum of all the distinct investment periods represented by t₁, t₂, t₃, . . . , t_n-1, t_n ;

c) Finding the final price at the Tth year by an iterative process described in f) to k) below using inputs derived from an equivalent stable financial condition, in which the resale price increases at the same rate as the net income, which increases at a constant rate to infinity in time;

d) Projecting the net income from the last or Tth to (T+t_n+1)th year;

e) Determining the ratio of the price (price at T) and the resale price (price at T+t_n+1) of the investment period from T to T+t_n+1 from the ratio of the net income at T and the net income at T+t_n+1 ;

f) Picking a trial price for the Fth year and determining the trial resale price (price at T+t_n+1) as the trial price multiplied by the ratio of the net income at T and the net income at T+t_n+1 ;

g) Projecting the cash flows and the sum of cash flows from the trial price, projected income, expenses, and other financial factors from the last or Tth to (T+t_n+1)th year;

h) Determining the last year cash from resale using the resale price;

i) Adding the cash from resale to the sum of cash flows from g);

j) Checking if the calculated average rate of return on investment, which is determined from the cash flows based on the price and the cash from resale based on the resale price is within a pre-assigned accuracy of the expected average rate of return on investment;

k) Repeating f) to j) if j) does not check, until j) does check thus indicating a correct price for the Tth year;

l) Using the price of the real estate or business found in k) as the resale price in the determination of the price for the (T-t_n)th year where t_n is the investment period from the (T-t_n)th to the Tth year;

m) Advancing backwards in time by repeating f) to l) for the (T-t_n -t_n-1)th and all prior years to find all resale prices;

n) Determining the present price of the real estate or business as the final iteration of step k) when the sum of all the investment periods t₁ +t₂ +t₃ + . . . +t_n-1 +t_n =T.