Turns out there is an economic advantage to using the monthly payment option when buying a new Florida Resident Annual Pass at Walt Disney World. To see how beneficial the new monthly option for Disney APs is, I did an analysis.
Present value of Florida Resident Annual Pass: $392.99
Present value of monthly pass with Minimal Acceptable Rate of Return of 1%:
A = Monthly Payment, n = 11, i = .01
Present Value = Initial payment + A[(1+i)^n -1]/i(1+i)^n
$84.14 + $266.86 = $351
Internal Rate of Return:
1.42%
Cost to renew your Annual Pass: $355
If you can get 1% interest on your money somewhere, you save $40 by going monthly and $4 over the renewal cost. With my bank, I can get roughly that on a CD. There are even some interest bearing checking accounts online that return more than 1%.
So take the same money you would have spent on an AP now and put it somewhere interest bearing and you will come out ahead. Who said you never learned anything useful on The Disney Blog.
Previously: WDW Rolls out Monthly Payment Plan for APs.
Present value of monthly pass with MARR of 1%:
A = Monthly Payment, n = 11, i = .01
Present Value = Initial payment + A[(1+i)^n -1]/i(1+i)^n
$84.14 + $266.86 = $351
Internal Rate of Return:
1.36%
How using Disney's Monthly Payment Plan for Florida Resident AP can save you money – http://bit.ly/9jbgpN even cheaper than renewing.
RT @TheDisneyBlog: How using Disney's Monthly Payment Plan for Florida Resident AP can save you money – http://bit.ly/9jbgpN even cheape …
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