Cost Comparison between Bicycle and Anywheel pass

Biking Assumptions:

  1. Average bicycle lifespan is about 3.5 years (SOURCE)

  2. Hybrid Bicycles are used. Specifically this decathalon bicycle: Hybrid Bike Riverside 100 6 speed V-Brake - Black. (SOURCE)

  3. Cost of maintenance is about $58.30 (SOURCE) And only paid this cost at the same time when we got our bicycle i.e. at T=0.

Calculations Assumptions:

  1. Discount rate accounts for the opportunity cost that was incurred because of inability to invest into the Straits Time Index(STI).

  2. Time period in my excel was taken to be monthly.

  3. Risk Free Rate(RFR) was taken to be 3.1% using last 3 months of data. (SOURCE)

  4. Equity Risk Premium(ERP) was taken to be 6.66% using last 3 months of data. (SOURCE)

  5. Final Monthly Discount Rate = [ 3.1% + 1*(6.66%) ] / 12 = 0.81%. Market Beta = 1.

  6. Monthly Pass is purchased at the end of every month. Price is fixed at $9.90/month.

EXCEL: https://imgur.com/a/nGVHNXP
Obviously, I can't show the full length of monthly subscription, there's 42 columns of them.
To explain the time value of money and why $9.90 today is different from $9.90 next month. Is because

  1. Inflation erodes buying powers, that same $9.90 today may be able to buy lesser goods next month.

  2. $9.90 next month is worth the same as $9.25 today. Because that $9.25 today could’ve been reinvested into STI, earned a return of 7% and be worth $9.90 by next month.

Conclusion:

So the difference in both is that Anywheel costs $351.03 while getting a bicycle costs $308.20. A difference of about $42.83. To me that amount is about 5.22% of my monthly NSF salary so quite a large sum.

But I think the convenience afforded to me by Anywheel where I don't have to carry my bicycle onto public transport and 0 effort into maintaining a bicycle is more than worth that $42.83.

One other factor I did not consider was that after 30 minutes you're actually charged about $0.50/hour. But most of the time I reach my destination in less than 30 minutes so quite a negligible sum.

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