I want to push back against this a little. He gets $500/month now, there is no guarantee he will keep receiving that number when he stops maintaining and improving his app. I would assume the number will go up if he keeps improving it, but if he stops it will eventually become 0$/month.

Doesn't time value of money decrease this effect? Assuming a fixed revenue over time, future revenue is much less relevant, so is its loss.

That's what the 4% is. A perpetuity that pays out $6000 a year is valued at $150,000 assuming a 4% discount rate. Without a discount rate, the value of any perpetuity would be infinity.

There's no guarantee $150k invested will have 4% returns either.

No, but if I had to bet on one over the other, I'm going with 4% returns.

To be fair: It will probably be easier for him to go from $500/mo to $1000/mo much easier than it will be to go from 4% APY to 8% APY.

No it’s not it’s the equivalent of a $6,000 a year part time job.

$150k in 20 years is still exactly $150k and produces returns.

A 20 year old mobile application has no value whatsoever.

Difference is apples and hand grenades.