Canuck
David Megginson
- Joined
- Mar 31, 2016
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After seeing the "Panel upgrade" thread spin out of control, I'd like to make a suggestion. Instead of agonising endlessly over resale value, why not amortise modifications or purchases, like you do the engine?
For example, let's say you spend $20K to make your interior look like a rich person's lounge or to get some fancy gadget installedin your panel. Pick the length of time you're reasonably likely to keep owning the plane, up to (say) a maximum of 10 years. Next, take the number of hours you fly per year realistically (say, 75 hours). That means that your fancy gadget is costing you roughly $27/flying hour over the next 10 years (*). If you think you'll get an extra $27/hour enjoyment out of it, then go for it!
After 10 years, it's fully written down to zero in your mind, so you (or the next owner) get to enjoy the slightly-worn or -out-of-date upgrade more-or-less for free. No more arguing whether it's worth putting $30K worth of avionics into a $20K PA-28-140.
(* OK, if you're a finance nerd like me, what you'll actually write down is the opportunity cost of the $20K over 10 years—assuming a safe 3% compound ROI, that's more like ~$27K you'll write down, so the hourly is a bit higher. If you're not a finance nerd, please ignore this note and live a happier life.)
For example, let's say you spend $20K to make your interior look like a rich person's lounge or to get some fancy gadget installedin your panel. Pick the length of time you're reasonably likely to keep owning the plane, up to (say) a maximum of 10 years. Next, take the number of hours you fly per year realistically (say, 75 hours). That means that your fancy gadget is costing you roughly $27/flying hour over the next 10 years (*). If you think you'll get an extra $27/hour enjoyment out of it, then go for it!
After 10 years, it's fully written down to zero in your mind, so you (or the next owner) get to enjoy the slightly-worn or -out-of-date upgrade more-or-less for free. No more arguing whether it's worth putting $30K worth of avionics into a $20K PA-28-140.
(* OK, if you're a finance nerd like me, what you'll actually write down is the opportunity cost of the $20K over 10 years—assuming a safe 3% compound ROI, that's more like ~$27K you'll write down, so the hourly is a bit higher. If you're not a finance nerd, please ignore this note and live a happier life.)
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