From the course: Financial Accounting Part 2
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Buying the Hong Kong car?
From the course: Financial Accounting Part 2
Buying the Hong Kong car?
- You and your family moved to Hong Kong in 1995. - We did. We lived there for three years. - Oh, did you buy a car while you were there? - No, but we actually did some financial analysis to determine whether we should buy a car. - What kind of analysis? - Basically, we did a discounted cash flow analysis or DCF. We forecasted the amount and timing of cash flows, used an interest rate, and estimated what a car would be worth to us. - Well, tell us some of the numbers. - Okay, well, I'll convert the numbers to US dollars but of course the original analysis was done in Hong Kong dollars. We estimated that we would receive about $1,300 in net annual savings in terms of our high spending on public transportation costs compared to the lower cost of operating the car: gasoline, maintenance, taxes and insurance. - Man, you must have been spending a lot in public transportation. - Yeah (chuckles), we were. On weekends, we like…
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