A Comparative Expected Value Analysis Study on Luxury Items Purchased in the United States

The present study conducted expected value analysis on eleven luxury item purchases in the United States. The cost to rent from a time-share from a current owner was less than the cost of the annual maintenance fee suggesting that is never a scenario in which the purchase of this time-share would provide economic value, even if one purchased it used on the secondary market for 1 cent on the dollar. Chartering one’s yacht 64 days per year for 10 years would generate $419,000 in revenue (chartering agency fees of 20% included). There would also be an additional maintenance cost of $12,000 resulting in total net charter net income of $407,000. The average cost to rent a forty-foot yacht would be $444 per day. Therefore a yacht owner would need to use the yacht 135.81 days ($60,300 / $444) a year in order to break even if one purchased the yacht instead of renting it. An R8 car owner that rents out the car on weekends could generate $2,500 a month, which would more than cover the monthly cost of owning an R8 ($2,182) and result in a net gain of $318 per  month. An average motor home owner would need to use it 445 ($23,100 / $51.93) nights per year in order for the motor home to provide more value than staying in a hotel. However, there are only 365 days per year so the purchase of a motorhome would never provide value. The total annual cost of pool ownership is $4,302, which comes to $36 ($4,302 / 120 days) per day cost based on 120 days of use each year. If the pool is only used on weekends over a 4-month time frame then the cost per day use would be $134 ($4,302 / 32 days). A $5,000 a diamond ring will lose about 60% of its value, the annual cost to insure is $75. If the $5,000 cost of the diamond ring had been invested and compounded at 5% annually it would be worth $13,524 in $20 years representing an opportunity cost of $426 per year. The total annual cost of ski boat ownership is 24,165, which comes to $201 ($24,165 / 120 days) per day cost based on 120 days of use each year. If the ski boat is only used on weekends over a 4-month time frame then the cost per day use would be $755 ($24,165 / 32 days). Passengers that purchase a middle seat as well as the aisle and window seat would pay 300% more and receive 300% more space, which was found to have provided more value than purchase of a first class ticket.  A prenuptial agreement that cost $2,500 would provide an expected benefit of $6,400.