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Equation to figure how much boat you can afford





PatTheGreat42
I'm trying to figure out an equation to help someone figure out how much boat they can afford. What I'm trying to figure out is if you have $1,000,000, and plan to use this amount of money to both purchase and maintain the boat, how much boat you can buy.

I figure if you have $1,000,000, the first thing that happens is that you spend some portion of this to buy the boat. The rest you can put into a savings account to earn interest. However, the cost of upkeep of the boat is about half the cost of the boat again per year.

So if I plan to spend $1,000,000, and plan to upkeep the boat for 25 years, how much boat can I buy to avoid spending over the $1,000,000?

Thanks.
escritor
I think that nobody can help you with your equation if you don't provide these data:


  1. How much does a boat cost?
  2. How much does it cost to maintain a boat?
Bikerman
PatTheGreat42 wrote:
I'm trying to figure out an equation to help someone figure out how much boat they can afford. What I'm trying to figure out is if you have $1,000,000, and plan to use this amount of money to both purchase and maintain the boat, how much boat you can buy.

I figure if you have $1,000,000, the first thing that happens is that you spend some portion of this to buy the boat. The rest you can put into a savings account to earn interest. However, the cost of upkeep of the boat is about half the cost of the boat again per year.

So if I plan to spend $1,000,000, and plan to upkeep the boat for 25 years, how much boat can I buy to avoid spending over the $1,000,000?

Thanks.

x is the cost of the boat. x/2 is the yearly maintenance. 12.5x is the 25 year maintenance. Assume that any interest on the capital will be taken up by a corresponding increase in maintenance costs (a dodgy assumption but this is not hard science).

13.5x=$1,000,000
x = $74,074
escritor
So you calculated the price of a boat using only the initial amount of money and the time span he provided? Surprised
Bikerman
escritor wrote:
So you calculated the price of a boat using only the initial amount of money and the time span he provided? Surprised

No - he gave me three pieces of information - that is enough to solve for x.
1) The cost of maintenance is 1/2 the boat cost per year
2) The lifetime of the boat is 25 years
3) The money available is 1,000,000

I simplified the sum by assuming that any interest earned on the capital would be spent on increases in costs (maintenance, mooring fees etc) which is a bit of a naughty assumption but, in real life, would probably turn out somewhere close to reality.

In fact I think the assumed maintenance costs are way too high. I would have thought that an annual maintenance bill for a boat in this class would be closer to 1/6-1/10 the cost of the boat.
escritor
I think that it all makes sense. You did an awesome job solving that problem.
Bikerman
escritor wrote:
I think that it all makes sense. You did an awesome job solving that problem.

Not really (thanks anyway). It's a trivial problem in algebra - I would expect any 14 or 15 year old pupil of mine to be able to solve it Smile
bogger
help = good karma

some people believe that having good karma is pointless unless you want to use it by generating bad karma

insults = bad karma

lol ^.^ sorry for spam
Bikerman
Err..who is insulting whom? I simply stated that I would expect any of my 14-15yr old pupils (when I used to teach) to be able to solve it - it's a basic algebra problem that any national curriculum maths pupil should be able to do. That is not to say that people who can't do it are stupid - they probably haven't been taught properly is all....
bogger
you insinuate the stupidity / insufficient education of PatTheGreat42, as he couldn't do the basic algebra, or if he could, he didn't bother, I assumed you assumed the latter.
Bikerman
bogger wrote:
you insinuate the stupidity / insufficient education of PatTheGreat42, as he couldn't do the basic algebra, or if he could, he didn't bother, I assumed you assumed the latter.

No, that is an unwarranted assumption. I am a teacher by 'trade' and I don't assume that anyone is stupid. My sister is terrible at math - particularly algebra, but she is certainly not stupid. Algebra is understandable, I believe, by anyone if taught correctly, but not everyone has the benefit of a good teacher...
escritor
I don't know the meaning of this discussion. He just meant that, as he is a great teacher, his students would be able to solve it. Wink
Bikerman
Well...I wouldn't say 'great' but I would agree with 'adequate' Very Happy
escritor
"A modest person seldom fails to gain the goodwill of those he converses with, because nobody envies a man who does not appear to be pleased with himself". ~ Richard Steele

Hehe. Smile
PatTheGreat42
Actually, I was trying to come up with something that I could put into Excel so I could play around with some of the numbers. I was imagining something involving like, differential equations or whatnot.

It was mostly figuring out how much money I make with interest on a continually decreasing amount of money that got me.
gr8inferno
question is,, Are you gonna have time to use the boat? co'z I see alot of peeps out there owns a boat or two, but no time to dock it, so you better off renting one if youre ony gonna use it for once or twice a month.
PatTheGreat42
The real trick is to find someone else with a boat and just sail on theirs. But sometimes you just gotta spend $1,000,000 over a 25 year period, ya know?
escritor
It's like an exercise I have to solve. "Supposing somebody earns 35 000 USD a month..."
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