[Solved] Future Car Purchase and depreciation...
I am building my base model, following the Pralana Gold video found on Bogleheads/youtube. The video modeled future car purchases. Under the Property tab the model showed the future cars with Current Market Value of 40,000 and a Real Appreciation rate of -15%. When I look at the Personal Property Summary Table (in Future Dollars) I see that the loan balance, monthly payment, value, and equity of a car with a current value of 40,000 has been depreciated from the beginning of the model, without the current market value being adjusted for inflation. For Example...
Car 1: Purchased in 2022 (CValue: 40,000, 2023 Value = 35,420, 2024 Value = 31,170...)
Car 2: Purchased in 2028 (CValue: 40,000, 2028 Value = 18,576, 2029 Value = 16,347...)
Car 3: Purchased in 2033 (CValue: 40,000, 2033 Value = 9,803, 2034 Value = 8,627...)
Following the example on the video, this affects future auto loan balance, and future dollar equity for future sale-trade.
Like the video model we have two cars, each on a 10y life cycle staggered 5 years apart. The sale of the 10yo car assists in the purchase of the next 40,000 (CValue, not future value) car.
How do I model the future purchase of a car with a current value of 40,000?
My guess is that you haven't filled in the Asset Type field. If you leave that blank, PRC will assume it's a home and the additional inflation rate will take effect in the model's starting year. But if you enter "Other", it'll work as you're expecting and those cars will have a $40,000 value (in today's dollars) in the year they're purchased and will depreciate from that point.
Thanks for the reply. That's exactly what I did. I didn't identify what type of asset it was. Once done, everything works just fine. Love the platform!
All good, thanks!!