Anyone here good with numbers?

[andrewducker]

I'm currently looking at the difference in price between going to a Samsung Galaxy Nexus by getting a contract (£35-ish/month) or by buying up front (£480+10/month). This works out to about £120-£140 cheaper by buying the phone myself, depending on exactly how I do it.

My question, then, is about discounting future costs. If I spend £480 now rather than in chunks then I lose the utility of that money over the next two years. How does one account for that?

I assume there's a simple equation I could plug in that would tell me to stop being so stupid and just buy the fucking phone, but I'd like to be sure...

Comments

[charleysjob.livejournal.com]

http://en.wikipedia.org/wiki/Time_value_of_money#Present_value_of_an_annuity_for_n_payment_periods

Your looking for the present value of future cash flows. In your case, with monthly payments, take your interest rate and divide by 12, and do it for 24 periods.

In excel or something similar, copy "25" in a row 24 times (the difference in monthly payments), then somewhere over on the left type "=NPV((5%/12), A1:X1)" and see if that's more or less than the difference in price.

(obviously, "A1:X1" should be replaced by wherever your string of 25s is)

[charleysjob.livejournal.com]

Shit wrong "you're". Going to self-flagellate now.