Near the end of the Boardwalk contract’s life, my dues might have risen to $11, but the amortized buy-in (using my previous calculation) is still $4.49. But not doing do makes things difficult to project far into the future. inflation-adjusted) dollars is hard to work out. Amortization calculates a fixed payment in nominal dollars every period, because that’s the way most people think about money. However, that’s not as useful a way of looking at it.
DVC CALCULATOR 2019 PLUS
So my all-in cost is $4.49 every year, plus the dues cost, though to be a useful analysis I need to account for the rise on costs of dues over time. If I had to pay $72 per point, how much per point per year, assuming that I could have put $72 into a mutual fund earning 4.5% instead? The answer is $4.49, which is much higher than the simple $72/29, or $2.48. So for, say, Boardwalk, there are 29 years remaining. That’s the amount of money you could have gotten just putting the money in a mutual fund and slowly drawing money out until it was down to 0 somewhere in the future. In other words, of the discounts Disney is giving you, the amortized cost is just the payback of the money you paid in. The cost to you for those discounted rooms in the future is the amortized cost. This is the same calculation used to figure the payment on a mortgage of a certain amount, which makes sense, because in essence you’re the bank – you give Disney a chunk of money, and they promise to “pay it back” by giving you discounts on rooms in future years. One way to spread a buy-in cost over a number of years is an amortization. That’s also not right – it takes more years than the simple analysis would suggest, because the money you are going to save in the future is worth less than the money you paid in the present.) (There’s a related error where people calculate their “payoff point” in years by adding up all their discounts to see in what year they end up “paying off” their buy in. If I am buying something that will get me a discount 40 years from now, I will not pay the same amount of money as if I’m getting a discount today. Money now is worth more than money later.
I’d also like to quote Don Munsil of MouseSavers on this topic:Īnyway, it’s bothered me for a while that lots of people calculate the “all in” cost of DVC by adding the dues cost to the buy-in divided by the number of years. While this is an interesting intellectual exercise, The bottom line DVC equation for me is: In terms of the discount rate, pick a ROI that you could actually achieve year-over-year. Please set your own realistic expectations for the annual dues increase and the discount rate for cash flows, as the figures in the spreadsheet are just placeholders. You’d compare this to would you would expect to earn over the long run by putting your money in a diversified stock fund.Īll the numbers in the yellow cells are meant to be changed by you to reflect your own situation. The internal rate of return (IRR) is calculated. The third tab covers the case of buying points only to rent them.
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