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Calculating Value Above Replacement

Rob Collie explains how to calculate Value Above Replacement:

Let’s say you’re trying to improve the fuel efficiency of your car, and you have a budget of $100 to make those improvements.  Furthermore, let’s say that you can only spend your budget on three different kinds of improvements:  better tires, better spark plugs, and a better exhaust system.

The simple answer, of course, is to buy the Best of each part – the best Tires, the best Sparkplugs, and the best Exhaust System.

But what if Reality rears its head and rudely insists that the Best Costs More?  What if there are a range of options available in each bucket, with varying price AND effectiveness?  Then what?

Read on for the solution which has not nearly enough baseball.