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 You can do IT is a regular feature
of laterlife.com aimed at trying to help
laterlife visitors make the most of Information
Technology on or off the web.
Jackie Sherman who runs the
You can do IT Question & Answer
section is an IT trainer and author. Jackie has spent
her career in education and specialises in teaching
IT to adults. Her courses for adults include such
topics as MS Office, the Internet, e-mail and basic
web page authoring.
  Jackie
has also written the four books shown
here - you can find more details about these by
clicking on the cover images above. Jackie has
also been running a course specifically for over
50s.
 Via laterlife.com Jackie aims to
particularly help those new to IT and the web to build
up knowledge and confidence, so no question is too
basic. At the same time she will cover Q&As for the
more experienced user.
So if you would like to ask a question
of Jackie, why not email her jackie@laterlife.com
or if you have discovered something
which may be of interest to others in making the most
of the web, then she would love to hear about that too
jackie@laterlife.com
DECEMBER 2006
Using
spreadsheets for complex everyday decisions
This week, I want to show you how to simplify what might
seem a complicated calculation using a spreadsheet package such
as Excel.
There are many decisions we have to make in our lives
such as whether to buy a new house, which holiday to go on, or
if it is better to rent or buy a digital television etc. that
can look daunting at first sight. However, if you break it down
into its individual components, it becomes far more manageable.
Today, I will take the example of buying a share in a
boat to show you how you could set up a spreadsheet to help
answer your questions and come to the right decision.
Imagine you are interested in narrowboat holidays but do
not want to own your own boat. The answer may be to share the
cost with others. This is a developing area and many companies
on the Internet advertise 12th shares in boats. You book
time-slots, take the boat out 3 or 4 times a year and can
eventually sell your share if you no longer require it.
Before buying a share, there are a number of questions you
need to ask yourself:
1. What age boat should you buy a share in?
2. What price should you spend on the actual share?
3. What will the running costs be (e.g. mooring fees,
licence, servicing, etc)?
4. Does the boat you pick need any major expenditure e.g.
a new engine?
5. Should you pay an annual insurance premium that
guarantees that the company will buy the share back off you at
the time you want to sell it? (If not, you may incur extra
running costs whilst you wait for a purchaser.)
6. Is it cheaper to hire a boat whenever you want a
holiday, rather than buy a share at all?
Step 1 – Gather all the information together.
Here is what your research might reveal:
a. The cost of a week's hire. This, at peak season,
averages £1,200, so four week-long holidays a year, with two at
low season, could cost £3,500 - £4,000.
b. Interest lost on the amount spent on the share e.g.
about 5% per year.
c. The likely value of the share in a few years' time,
when you might want to sell it again. Research shows that shares
lose about £200 p.a. for older boats but nearer £500 for new
ones.
d. The average running costs for 1/12th share in a
narrowboat. Let's say that this is going to be £1,300 p.a. if no
major repairs are needed. Over 10 years, though, you might need
to buy a new engine and have the outside repainted. This means
that over 5 years an older boat would cost more like £1,400 p.a.
although a new boat would stay at £1,300 as it would not need
major work for many years.
e. The cost of buy-back insurance. Necessary for an older
boat that could take longer to sell, this can be around £120
p.a.
Step 2 – set up the spreadsheet. You need to have
entries for:
-
Number of years in scheme
-
Rate
of interest your money would get in a bank
-
Capital spent on the share
-
Estimated value of the share when resold
-
Annual Maintenance costs + any large expenditure
-
Buy
back option p.a.
If
you keep the shares 5 years and buy a share in an older boat
that costs £2,000 and loses £200 p.a., this is how it would
look:
If you bought an £8,000 share in a newer boat, maintenance
would be less and you would not take out buy back insurance but
the share would be worth less over time.
For any
pre-2002 boat, you would need to check whether a replacement
engine/paintwork had been carried out recently, so that you
could be sure that running costs would be at the lower level.
Step 3 – Final calculation.
With all the financial facts in place, you can now work out the
cost to you of a share in differently aged narrowboats, compared
to hiring over the same period.
The cost of the share would be:
Cost of maintenance (+ insurance for older boat) + loss of
interest on your original capital + loss of value of the share.
New boat:
Old boat:
If hiring costs £20,000 over 5 years, a share is clearly much
cheaper – but when it comes to newer boats, perhaps not as cheap
as you might first have thought.
View previous editions of YoucandoIT
for more useful Questions and Answers
For a wealth of books on the web and IT generally,
visit Amazon
and under the books section select Computers and
Internet.
Don't forget to visit the general
laterlife features section called laterlife
interest
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