Re:Tesla’s headquarters will move to Austin
by martinald on Thursday October 07, 2021 @09:44PM
(#28794718)
There will be interest on the loan. Probably fairly low given the collateral, but it won't be 0 (assuming this is not a sweetner from some investment bank that works a lot with Tesla/SpaceX).
If it's hedged you actually don't have any upside so you will always be 'underwater' on the loan assuming >0 interest rate.
If interest rates were higher, it probably wouldn't make sense to do this endless loan trick[1]. Say you get charged 5% on this loan or you could pay 30% cap gains. It would only take 5 years for the interest payments to outstrip the upfront hit on the tax.
1. This is very simplistic though, as likely the $1bn would be invested in some way that would kick off some return, probably enough to cover the interest.
If it's hedged you actually don't have any upside so you will always be 'underwater' on the loan assuming >0 interest rate.
If interest rates were higher, it probably wouldn't make sense to do this endless loan trick[1]. Say you get charged 5% on this loan or you could pay 30% cap gains. It would only take 5 years for the interest payments to outstrip the upfront hit on the tax.
1. This is very simplistic though, as likely the $1bn would be invested in some way that would kick off some return, probably enough to cover the interest.