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Phone Comparison

The document compares the costs of purchasing an iPhone 7 Plus outright and with no contract mobile plan versus a 24-month contract mobile plan. It calculates the net present value of each option using a 4% annual discount rate. The analysis finds that purchasing the phone outright and with a no contract plan has a lower net present value of $1,599.71 compared to $2,066.43 for the 24-month contract plan, making it $466.72 cheaper.

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Nigel Thomas
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47 views5 pages

Phone Comparison

The document compares the costs of purchasing an iPhone 7 Plus outright and with no contract mobile plan versus a 24-month contract mobile plan. It calculates the net present value of each option using a 4% annual discount rate. The analysis finds that purchasing the phone outright and with a no contract plan has a lower net present value of $1,599.71 compared to $2,066.43 for the 24-month contract plan, making it $466.72 cheaper.

Uploaded by

Nigel Thomas
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

DCF Valuation

Phone cost
iPhone 7 Plus - 128Gb
Monthly plan cost (contract)
Telstra. $700 calls. 1.5Gb data. 24 months.
Monthly plan cost (no contract)
Jeenee mobile. $500 calls. 1.5Gb data. Profits go to charity.
Discount rate (annual)
Discount rate (monthly)
Purchase phone outright + no contract plan
Period
Discount factor
Cost
Discounted cost
NPV

0
1.000
$ 1,024.00
$ 1,024.00
$ 1,599.71

Contract plan
Period
Discount factor
Cost
Discounted cost
NPV

0
1.000
$
86.00
$
86.00
$ 2,066.43

Outright is cheaper by $466.72

999.00

86.00

25.00
4%
0.33%

$
$

1
0.997
25.00 $
24.92 $

2
0.993
25.00 $
24.83 $

3
0.990
25.00 $
24.75 $

4
0.987
25.00 $
24.67 $

5
0.983
25.00 $
24.59 $

6
0.980
25.00
24.51

$
$

1
0.997
86.00 $
85.71 $

2
0.993
86.00 $
85.43 $

3
0.990
86.00 $
85.15 $

4
0.987
86.00 $
84.86 $

5
0.983
86.00 $
84.58 $

6
0.980
86.00
84.30

$
$

7
0.977
25.00 $
24.42 $

8
0.974
25.00 $
24.34 $

9
0.970
25.00 $
24.26 $

10
0.967
25.00 $
24.18 $

11
0.964
25.00 $
24.10 $

12
0.961
25.00
24.02

$
$

7
0.977
86.00 $
84.02 $

8
0.974
86.00 $
83.74 $

9
0.970
86.00 $
83.46 $

10
0.967
86.00 $
83.19 $

11
0.964
86.00 $
82.91 $

12
0.961
86.00
82.63

$
$

13
0.958
25.00 $
23.94 $

14
0.954
25.00 $
23.86 $

15
0.951
25.00 $
23.78 $

16
0.948
25.00 $
23.70 $

17
0.945
25.00 $
23.62 $

18
0.942
25.00
23.55

$
$

13
0.958
86.00 $
82.36 $

14
0.954
86.00 $
82.09 $

15
0.951
86.00 $
81.81 $

16
0.948
86.00 $
81.54 $

17
0.945
86.00 $
81.27 $

18
0.942
86.00
81.00

$
$

19
0.939
25.00 $
23.47 $

20
0.936
25.00 $
23.39 $

21
0.933
25.00 $
23.31 $

22
0.929
25.00 $
23.24 $

23
0.926
25.00 $
23.16 $

24
0.923
25.00
23.08

$
$

19
0.939
86.00 $
80.73 $

20
0.936
86.00 $
80.46 $

21
0.933
86.00 $
80.20 $

22
0.929
86.00 $
79.93 $

23
0.926
86.00 $
79.66 $

24
0.923
86.00
79.40

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