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Buying machines or staying with coin-op laundry
Note: You can use any financial calculator to do this problem, but if you want the BEST, you can
get our
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Financial Calculator for iOS, Android, Mac, and Windows!
THE SCENARIO
It's laundry day, and you know what that means: financial analysis. Well, that's not
usually what it means, but today I'm in that kind of mood.
My building has laundry machines, and I figure that I spend about $25
more per month on laundry than I would if I owned my own washer and dryer (the coins go to pay for water and electricity, which I'd have to pay for separately if I owned my own washer and dryer).
According to a quick web search, washers and dryers should last for a minimum of 10 years after purchase.
The question: If I bought a washer and dryer and they lasted 10 years, at which point they break down and can't even be sold for scrap, and I wanted to make 8% on my money, what's the
most I could pay for them today? Assume that my laundry costs would not rise over those 10 years.
THE SOLUTION
First things first, make sure the calculator is using 12 Payments per Year.
N: 120 (The machines last for 10 years)
I/YR: 8 (I want to make 8% on my money)
PV: (This is what I'm trying to find)
PMT: 25 (Buying the machines would save me $25 per month)
FV: 0 (The machines break down after 10 years)
The most I could pay for the washer and dryer is $2,060.54 if I want to make 8% on my money.
I'm actually a bit surprised - I figured the number would be quite a bit lower than the two-grand figure the calculator revealed. If I had anyplace to put machines, I'd be sorely tempted to pick some up. What do you think? Did I make the right assumptions with this analysis? Or does the overwhelming joy that comes with coin-op laundry in public machines have some dollar value that I should fold into the calculation? Let us know in the comments!
