Loans and Manufactories

[Laurent1944]

The original question was: is it worth to take loans to build manufactories ?

For me, the answer is no with the following very simple math:
_ a manufactory will produce one extra good a year, with value 4 meaning 4 ducats a year. With good trade control of the node and some bonus, this can raise to maybe 10 ducats (prod + trade value), but 8 ducats per year is still a more reasonable estimation.
_ to build the building you need more than 400 ducats (with good bonuses) and the interest rate is 3% or more, so the loan cost is at least 12 ducats a year, HIGHER than what is produced by the manufactory.

So if you have no money at the start and build such a building, you end with a growing debt, not even taking in account the five initial years when you pay the interest and the buidling is not producing anything, neither the inflation hit you will take every five years.

 

[TheMeInTeam]

The original question was: is it worth to take loans to build manufactories ?

For me, the answer is no with the following very simple math:
_ a manufactory will produce one extra good a year, with value 4 meaning 4 ducats a year. With good trade control of the node and some bonus, this can raise to maybe 10 ducats (prod + trade value), but 8 ducats per year is still a more reasonable estimation.
_ to build the building you need more than 400 ducats (with good bonuses) and the interest rate is 3% or more, so the loan cost is at least 12 ducats a year, HIGHER than what is produced by the manufactory.

So if you have no money at the start and build such a building, you end with a growing debt, not even taking in account the five initial years when you pay the interest and the buidling is not producing anything, neither the inflation hit you will take every five years.

It's possible to have loan costing 4 ducats a year (1%) or less in your above scenario by stacking interest reduction. In such a case taking loans to build them wins assuming your income values.

 

[Quaade]

I understand what you mean. If it takes too long to save 500 ducats to build, then taking loan will start make profit faster(assume that steady income repaying cost or loan).

Yes and no... Personally I get what you mean... If it takes too long to save it up... It will usually also be way more difficult to pay them back... The better way to do it is grabbing a cash pig... Usually I go war rep and ducats from all allies in a war... You get lucky at times and get 1k ducats ;-)

The math on building manufactories being a top profit option is unquestioned at this point as far as I know. Once someone's learned to not trust the UI wrt income they're an amazing deal. The issue is more whether the interest cost of a loan gives more total benefit than simply waiting to get the money and building the manufactory then.

It´s still funny to hear the misconception though ;-)

The original question was: is it worth to take loans to build manufactories ?

and the answer is... Sometimes... Depending on circumstances and the goal... Since I can personally decide to grab loans to build up manufactories en masse to have them done before manufactories insti start... increases my chances of getting it and even if not... More manufactories makes it embrace faster anyway in my land... In that case it´s not just the matter of losing a bit of income since I save money aswell by having it in as many provinces I can when I need to embrace

 

[Laurent1944]

While building a lot of manufactories with a lot of loan is a bad financial operation, I agree that it could be useful for institution.

Even before manufactory institution, it could be useful for the world trade one: if you build one manufactory in each of your province in your home node (that you probably control in 1590s) just before 1600, then you can push it to be the most valuable in the world and have the institution starting in your country rather than in Genoa or London, the usual places.

Then I wonder if the more efficient strategy would not be to declare bankruptcy just after the institution AND at least five years after the last manufactory was built (buidlings built/upgraded in the last five years before bankryptucy are destroyed according to wiki). So you won't pay for your manufactories in the end. And if you plan for it, a bankruptcy is perfectly manageable to recover quickly (all you need is +3 stability, a truce with your big neighbours for at least 5 years and then to spend all your monarch points before hitting the button).

In this strategy, you can have high hopes to have both world trade and manufactory institution in your home country.

 

[bly08]

If you build manufactories on 4PG trade goods in the scenario I outlined, the extra income can pay off interest. In any other situation I agree that it's not worth it.