TVM, cell phone contract & subsidy Vs. no contract & no subsidy

Have you checked out Ting.com? They run on the sprint network, but they roam (for free) on Verizon...I get really good coverage and my bill averages around $45/mo. Check out swappa.com for phones. You can bring any sprint phone to ting. FWIW, I find the big carriers all have sucky deals and the small ones (boost, virgin, etc) all have sucky phones. So far this has given me the best of both worlds.

And to help with the math, from a hobbyist perspective, you aren't doing pure TMV here because the asset has a service cost which doesn't go towards PV or FV- that is $120 a month. The TMV calculations should be done on the difference between your minimum costs and various plans' subsidies.

these are Verizon offers There's a really, really simple rule that always works for evaluating offers from phone companies, and it is this: the offer that would look the most attractive to an innumerate and impulsive teenager is the most expensive option. You can do the calculations yourself if you like, but they will always come out in accordance with the above rule. This is because the phone companies have already done the calculations, then adjusted their pricing to make the most money they can from the largest segment of their market. What the rule means, in practice, is that avoiding 24 month contracts with phone companies is almost always an excellent idea.

You are more familiar with the ins-and-outs than I am. Conceded. But if I don't end the Edge contract early, or if I pay off the phone, then it's a non-issue to me. See, to me, two years is not very long. I haven't been dying to get out of a cell contract for 10+ years. Based on that history, and because of Verizon's coverage and the known monthly cost, I'm not using that possible contingency as much of a basis for my decision. I didn't share this info in my question because it wasn't relevant to to the question. This was a question about TVM formula setup (see the original question, please), so I didn't share all of my pertinent thoughts and motivations on the subject of being locked into a cell phone contract. For example, I also didn't explicitly state that if I can come out better monetarily, then I wouldn't mind paying full price for the phone 100% up front. (Edge just allows me to prorate that cost, interest free. In fact, considering inflation, it's slightly negative interest.) So, to me, especially for the purpose of the original question, what happens if I decide to leave the contract early is essentially moot. Mostly because I wouldn't mind paying off the balance on the phone if I needed to. This was not fun and a waste of both of our time. Thanks for your time and effort and the info, though.

Also, here's the http://s7.vzw.com/is/content/VerizonWireless/Footer/prod-edge-contract.pdf you'll need to sign at purchase.

it's only a contract to pay off the phone (or pay off 75% and give them back the phone) If you cancel service to your Edge devices, you're on the hook for the remaining price of the phone at termination. From the http://www.verizonwireless.com/support/verizon-edge-faqs/: If you voluntarily suspend service to your device (with or without billing) you will still receive a monthly statement with your Verizon Edge charges. The charges are due according to the payment schedule included on your Verizon Edge agreement. If you cancel all lines on your account, all remaining Edge balances will be applied to your next monthly statement. You can upgrade your device after you've paid 75% if you turn it back in and keep Verizon service. If you cancel service, though, you're on the hook for everything. If a rep told you otherwise, they were confused or being dishonest. Therefore, it's not a typical lock-you-in-for-the-duration "contract". The penalty for canceling a traditional Verizon contract is an early termination fee of $350 - approximately the discount they gave you when purchasing the phone - during the first seven months of the contract, after which the ETF gradually decreases. As such, the amount due at an early termination with Edge with an expensive device like the iPhone will often be greater than the amount due at termination with the traditional contract. There can be more lock-in with Edge.

Maybe this is a semantic issue. I guess technically Edge is a contract, but, it's only a contract to pay off the phone (or pay off 75% and give them back the phone) and keep Verizon until that's done. As I said in (c) above. Therefore, it's not a typical lock-you-in-for-the-duration "contract". That's what matters in this situation and that's what I was saying.

He said Edge is not a contract. I hate to pick on this point, but it really bothers me that both Costco and Verizon have said this to you. It's a blatantly dishonest statement. Below are two statements from Verizon's web site that clearly indicate that Verizon Edge is a contract-based plan. From the http://www.verizonwireless.com/support/verizon-edge-faqs/: Does the Verizon Edge program require an agreement? Yes, when you participate in the Verizon Edge program, you will enter a 24-month Verizon Edge Agreement. However, this agreement is different from traditional 2-year service contracts because you can upgrade after 30 days with Edge, provided you have paid for 75% of the device and return your existing device in good working condition. Customers must have and maintain a Verizon Wireless service agreement when they purchase a device under Verizon Edge. From http://www.verizonwireless.com/mobile-living/network-and-plans/verizon-edge-plan-top-questions-answered/: Am I under a service contract with Verizon Edge? Yes, you’re required to maintain a Verizon Wireless service agreement if you wish to continue to make your monthly Edge device payments. So, yes, Edge is a contract plan. The "traditional" Verizon contract is for 24 months of Verizon cell phone service that also includes a discount subsidy on a phone. Verizon Edge is a contract for the 24-month purchase of a phone that also includes a requirement you use Verizon cell phone service. I recommend that you read over the specifics of the contract in the Edge FAQ carefully before making a decision.

eschatfische, Thank you for the reply. Your post was the most thoughtful and informative one yet, and I appreciate that. To show my appreciation for your effort and time, I'll respond as well as I can. I guess the best way to reply would be sort of a bullet pointed format. a) My question was mainly about how to find the values for the TVM formulas. I included the contract/no contract situation in order to give some context, and to put some numbers out there for people to use in their answers. b) Based on my wife's and my past, I don't expect to replace these phones for at least 2 years. So, I'm planning to choose our next cell phone plans based on this assumption. c) Because of your answer, I just called Verizon (not Costco, btw). He said Edge is not a contract. It's an offer to prorate the cost of a phone over 24 months. I could leave Verizon at any time. If I left before the phone is paid off, I would owe them the phone and 75% of the phone's price, or I could just pay the balance owed on the phone. d) I'm looking at Verizon specifically because their coverage is (as far as I can tell) the best. Cricket is AT&T. We want to be on Verizon's network. Less money would be great, but our reason for leaving T-Mobile (after 10 years) is their coverage, so I might as well fix that problem as completely as possible. e) Verizon pre-paid plans don't offer Edge. Once again, I truly appreciate everyone's efforts at helping me. I believe they all came from a good place. Still, the goal of this question was for help with TVM terms, and it appears to be a lost cause now. Oh well, this one didn't go my way. I'm actually surprised no one with TVM knowledge answered. Wrong venue, I guess.