HOW TO ANNUALIZE COSTS; FINANCIAL MATH, SIMPLE MATHEMATICS, EXAMPLES FOR PERSONAL FINANCES
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Personal finance tips for simple management of your money, income and debt.
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8.12 HOW TO ANNUALIZE COSTS; FINANCIAL MATH, SIMPLE MATHEMATICS, EXAMPLES FOR PERSONAL FINANCES
Only by annualizing can you compare total costs over the same period of time.
Consider the following examples:
== You lower your auto insurance saving $10 on semi-annual payments.
Total annual savings = $10 X 2 = $20.
== Save $100 on a car you'll use for 5 years.
Total annual savings = $100/5 = $20.
== Save $.50 on cereal bought every week.
Total annual savings = $.50 X 52 = $26.
Guess what? The $.50 saving is the biggest because you buy it each week.
8.12.1 FIGURING THE COST OF "INSTANT-ON" CONVENIENCES
We calculated the annual electric cost of an instant-on TV and a cable box when they are not being used. The TV uses about 6 watts the cable box about 20 watts. I estimated they were not being used for about 12 hours each day.
The math goes like this:
(26 watts X 12 hours X 365 days per year) divided by 1000 = 113.88 kilowatts.
A national average for the cost of a kilowatt is 8 cents. So:
113.88 kilowatts x 8 cents = $9.11.