Value of prepaying

Well, you can do a net present value of each payment, and calculate the 'return' on your $419.40.

Or I can multiply, see you are paying $419.40 instead of $479.40. Since the average of you payment stream would be six months, it seems a 14% return for 6 months, or nearly 28% per year. This is 'back of the napkin', but close enough for your question. I'd do the above NPV a bit later. ( I am covered in paint right now, and this is my break)

Joe

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Yes, I did the NPV calculation and got around 28%. I also used Excel's XIRR function and got closer to 35%.

Your back of the napkin answer, though, is more than close enough to convince me that it is a worthwhile "investment".

Thanks.

--ron

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Even if it isn't worthwhile from the NPV point of view, it is from the time point of view. That is 11 payments that you don't have to worry about getting lost, writing checks, getting mishandled, or whatever. I'll take that time savings and reduction in worry any day of the week.

-john-

That could be an issue for some, and would be for me if I were still mailing paper checks. But I bank through USAA bank. They have free bill paying over the Internet and I can set up a payment to repeat monthly, for

--ron

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who is the ISP? will they go broke before the 12 months is up?

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On Sun, 10 Aug 2008 09:41:04 -0500, "Gil Faver"

On 2008-08-10 07:41:04 -0700, "Gil Faver"

I don't plan for these kinds of events (nor for 500 year floods) :-))

--ron

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"Gil Faver"

Having worked for a furniture assembler that was approaching bankruptcy, there are symptoms that signal the end is near. Customer Prepaids are one of them. They need the cash NOW because their supplier will only take cash after several checks and invoices have bounced. Short loads are another. "I'll get you the rest of your order next week". That way he can keep several customers somewhat happy. Slow delivery is another, again because he doesn't have the ready cash to pay his supplier.

If you see or hear of any of the above, run the other way.

I got caught on a guarantee for an installed A/C unit. Big ad special- and on the sales invoice- 10 yr guarantee on parts and labor. 2.5 yrs later I learn that although he was a franchised dealer, it was HIS guarantee and not the manufacturer. He and his business were nowhere to be found.

Chip

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