I fully understood what you’re saying the first time around. I had a 7.5% loan that I paid off instead, the YOLO bit was a joke because this forum exists to drive the AutoNation stock down.
As for the Excel bit, that’ll happen with a low mf, but will change quickly as the APR exceeds 3-4%.
How do you figure? MSDs save the same amount per msd, regardless of what the base MF is.
The difference between simple interest and compound interest is negligible at low interest rates, but really balloons as rate/time in the equation increases.
In this case, compound interest is the right one to look at, since your monthly cash flows could (in theory) be invested, and could earn you interest.
And that has what to do with what money factor is being applied on the lease?
If we are talking about computing the savings of MSDs by either using an irr calculation or the annual ROI, you’re simply looking at the savings as a result of the MSDs and their cost. A higher MF will increase the MSD cost, if all else is equal, lowering both the IRR value and the annual ROI value, but it isn’t going to cause them to significantly diverge as MF increases.
If you’re talking about reinvesting of the cash flow and comparing investment options, you’re on to a new topic from what was being discussed when talking about calculating the savings via ROI or irr.
Try doing your “divide by 3” math at higher mfs and it won’t tally with the IRR.
Or don’t, it doesn’t make any difference. This is Finance 101.
Using your calculator numbers, if I bump the mf up to .002, calculating irr gives 7.6%. calculating annual ROI gives 7.6%.
If I bump the mf up to .003, calculating irr gives 6.7%, annual ROI gives 6.7%
Add a few sig figs and they’re different numbers, but they don’t diverge significantly. Nor should it. It’s just math. The savings per MSD is not affected by the mf, only the MSD amount is.
Don’t bother. It’s a classic case of not having the liquidity for the MSD in the first place; all the subsequent nonsense was just self-serving drivel to hide that fact.
And then gets really basic finance wrong yet tries to flex.
Seen both a million times.
LOL, whatever floats your boat.
“It’s not an IRR because it’s not compounded. It’s like simple interest” is the dumbest thing I’ve heard anyone say on this forum, including the $8000/$800 deals.