Quote:
Originally Posted by kaisen
Wow, that's flawed. Not wrong, just flawed.
You'd invest $52500 in the Ferrari over 5 years
You'd invest $35000 in the G37 over 5 years
How is that equal? I understand that you'd recuperate all of your initial investment with the 348, and only half with the G37. But you do see that you'd shell out MORE of your cash with the 348. Most people don't think this way. Cash flow and opportunity cost here are NOT equal. And that's an important point to overlook.
|
Yes, the amoutn of cash required to do the deals are different- but in the end the amount of money lost over 5 years is the same- after 5 years, the Ferrari could be sold for 35K (assuming no depreciation, not quite possible but who knows with the market). The G37 would sell for half it's purchase value or less.
52500 ferrari investment - 35000 recuperated costs when sold = 17.5K gone.
35000 G37 -17500 recuperated costs when sold = 17.5K gone.
The exact same.
The amount of investment cost only matters if you don't have the cash to do the deal.