DG Smart Plan offers HTC Legend in 24-month and 12-month contract. How to determine which one is the best contract?
Under the sign up contract, you are required to pay advance for RM300 and RM500 for 12-month and 24-month contract respectively. The advance payment will be used to offset the totaled bill, which depends on the individual usage. Let us make the assumption, I only use data unlimited rather than making calls and sending sms/mms.
Another assumption that we can make is trade in the phone after 24 months or 12 months is available for the price of RM300 and RM500.
Last assumption is the finance cost for the projects, said 2.5% p.a.
So the cash flow comparison for both plans are tabulated as below:
if NPV > 0, project accepted while NPV < 0, project rejected.
However both projects are in executed in the monthly payments, thus XNPV is used.
XNPV(rate,value arrays,date arrays)
Rate is the annual finance cost, which I take 2.5% p.a as the risk free rate that just increased recently after BNM's OPR announcement.
12 months you save RM600, which is saving RM50/month.
24 months you save RM1000, which is saving RM41.66/month
Less commitment for higher saving/month.
XNPV(24-month) = -RM292 while XNPV(12-month) = RM292.
Thus, the decision shall be taking 12-month plan. 12-month plan is more worthy in the sense that depreciation of HTC-Legend is lesser, and saving/month is higher if compared with 24-month. Rule of thumb, I generally change my handset within a year. By one year later, I am sure there will be a greater deal far far better than current.
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