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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.
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