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TechAnalysisPast Article

Patience Is a Capital-Spending Problem

Technology stories often turn patience into a virtue. In a spreadsheet it is a discount rate.

By Priya Raman, Tech and Business Analyst

New York1 min read

brown concrete building during daytime
brown concrete building during daytimePhoto by Tomas Eidsvold on Unsplash

A company that says it is investing for the long term is saying its cash flows are back-loaded. That can be true and still be a bad use of money, or true and a good one. The adjective 'long-term' does not settle it. The discount rate and the cash flows do, and outsiders rarely see the second.

What outsiders can see is the public reference rate: a Treasury yield, dated. When that yield is higher, patience is more expensive in the only units a finance committee can share across projects. The company's own projects remain private.

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