Eddy Current AD

[lamont337]

My hub failed the ECI a few years ago. Bought a used prop for 1 amu. I was resealing a tank at the time so $$ was tight. Even so, I don’t think I would have spent $9K on a new prop and wouldn’t today either. Current prop still has the AD.

20 minute flight a $200 gets it done.

[mooniac15u]

17 hours ago, skydvrboy said:

I could see how it might make sense if/when the prop needs work done on it anyway.  I fly about 50-75 hrs a year, so I need the inspection about every year and a half.  That "pays" me about $160 for my time to fly 30 minutes to the shop, wait 30 minutes for it to be done, and fly home.  And... it gives me another excuse to fly. 

I used a 7 payback, because I won't invest in anything with a longer payback.  If it's longer, it's an expense and not an investment.  Any longer and I could put the money in an investment instead and use the proceeds to pay the recurring cost indefinitely and be money ahead.  

Let's look at the investment scenario a little closer.  I'm not sure where the $160 comes from but in your previous post you used a cost of $20 per month which is $240 dollars per year so I'll use that.  At a cost of $3000 for the hub the cost differential in year one is $2760.  In order to pay your yearly ECI cost that would have to earn about 9%.  After eight years you have $2760 in the bank and a hub that still needs ECI inspections.  If you pay for the hub up front and then each year put the cost of the ECI in that same account at 9% you will have just over $3000 and a hub without the recurring expense.

[mooniac15u]

10 hours ago, lamont337 said:

My hub failed the ECI a few years ago.

But I heard on MooneySpace that the AD is bogus...

[Yetti]

40 minutes ago, mooniac15u said:

Let's look at the investment scenario a little closer.  I'm not sure where the $160 comes from but in your previous post you used a cost of $20 per month which is $240 dollars per year so I'll use that.  At a cost of $3000 for the hub the cost differential in year one is $2740.  In order to pay your yearly ECI cost that would have to earn about 9%.  After eight years you have $2740 in the bank and a hub that still needs ECI inspections.  If you pay for the hub up front and then each year put the cost of the ECI in that same account at 9% you will have just over $3000 and a hub without the recurring expense.

Lets mess up the math.   Year 1 I did the inspection with I believe 11 hours to go, but the guy was at the field.   The next year at annual I still had 30 hours to go so might get a year and half or quarter.

[MARZ]

16 hours ago, David Herman said:

I know prices vary ... but we had our hub modified when we had the prop overhauled in early 2014. The overhaul was about $2k and the hub mob about $1k. = Total $3k Sensenich Propellors KGVL. 

(Fyi ... we purchased our C in April of 2013.)

I had the mod done while I was doing the top end - just about the same cost, and it was time to have it opened up anyhow. Worth the money in my mind. 

[MARZ]

11 hours ago, Yetti said:

True, but you are using oil against seals that were designed for grease and that does not seem like a good path.

Pretty sure that the process takes replacing the seals that are compatible with the oil 

[mooniac15u]

3 minutes ago, Yetti said:

Lets mess up the math.   Year 1 I did the inspection with I believe 11 hours to go, but the guy was at the field.   The next year at annual I still had 30 hours to go so might get a year and half or quarter.

Everyone's scenario is different and it can extend the timeframe on the break even point.  For me the cost of the hub was lower because Hartzell was offering the hub at half price if you had them do the overhaul.  They are located near me so I flew my plane there and had them do the work.

The economics were also different when the AD was first issued.  It required an ECI at annual AND every 100 hours.  If you were flying more than 100 hours per year you could end up needing two ECI inspections per year.  They have since modified the AD to only the 100 hour timeframe.

I also put a fairly high value on my time.  It is the thing I have the hardest time getting more of.

[Igor_U]

1 hour ago, mooniac15u said:

 For me the cost of the hub was lower because Hartzell was offering the hub at half price if you had them do the overhaul.  They are located near me so I flew my plane there and had them do the work.

Was this done recently or when the AD came out and Hartzell offered a hub 50% off for a year or so?

The owner of my friendly prop shop at KBFI told me that eventually he'll stop doing the inspection unless I OH the prop siting the liability issues.

Thank you.

[mooniac15u]

Just now, Igor_U said:

Was this done recently or when the AD came out and Hartzell offered a hub 50% off for a year or so?

The owner of my friendly prop shop at KBFI told me that eventually he'll stop doing the inspection unless I OH the prop siting the liability issues.

Thank you.

I forget the exact date but I think it was around 2007.  My current Mooney has a McCauley prop.

[Browncbr1]

15 minutes ago, Igor_U said:

Was this done recently or when the AD came out and Hartzell offered a hub 50% off for a year or so?

The owner of my friendly prop shop at KBFI told me that eventually he'll stop doing the inspection unless I OH the prop siting the liability issues.

Thank you.

that's what happened to the previous owner of my plane.   The shops refused to inspect or service the original prop, so be bought a new top prop, then i bought the plane with 160 hours on the new top prop.... the way he explained it to me, he had no choice.

[Igor_U]

There are other shops doing it but further away and charge more.

Sad part is that my prop was new in 1990-is at the time B-hubs came out. Bad luck...

 

[skydvrboy]

2 hours ago, mooniac15u said:

Let's look at the investment scenario a little closer.  I'm not sure where the $160 comes from but in your previous post you used a cost of $20 per month which is $240 dollars per year so I'll use that.  At a cost of $3000 for the hub the cost differential in year one is $2760.  In order to pay your yearly ECI cost that would have to earn about 9%.  After eight years you have $2760 in the bank and a hub that still needs ECI inspections.  If you pay for the hub up front and then each year put the cost of the ECI in that same account at 9% you will have just over $3000 and a hub without the recurring expense.

The $160 came from the fact I only do my ECI about every year and a half.  18 x $20 = $360, less $200 for the ECI.  My mistake on my initial calculation of $1,680 is that I depreciated the replacement prop out over the 7 years, when in fact it would still have some value left.  What that is I don't know, but your calculation assumes it still has $3k in value left which I think is optimistic.

In addition to whatever I have to pay for the hub, I also have to pay for it to be IRAN'd and installed.  After searching a bit, it seems that can run anywhere from $650 to $2500 depending on what needs done.  Anyway you look at it, I can't afford to pay him much for the old non-AD hub.

Fortunately, I'm guessing he doesn't value it too much as it is currently being used as an office decoration.  I could even offer to give him my old hub, which would be just as valuable as an office decoration.

[RobertGary1]

1 hour ago, Igor_U said:

Was this done recently or when the AD came out and Hartzell offered a hub 50% off for a year or so?

The owner of my friendly prop shop at KBFI told me that eventually he'll stop doing the inspection unless I OH the prop siting the liability issues.

Thank you.

Get a new prop shop. This is silliness.

-Robert

[mooniac15u]

1 hour ago, skydvrboy said:

My mistake on my initial calculation of $1,680 is that I depreciated the replacement prop out over the 7 years, when in fact it would still have some value left.  What that is I don't know, but your calculation assumes it still has $3k in value left which I think is optimistic.

My calculation doesn't assume any particular value at 7 years.  The value would be comparable between the two propellers with the new hub presumably having a higher resale value.  The values I'm talking about are cash assets.  $3000 spent up front on a hub with $240 savings per year put into an account vs sequestering the $3000 ($2760) and leveraging the interest.  With the up front investment you finish with an AD-free hub at whatever residual value plus ~$3000 cash.  With the continued ECI path you end up with a hub that will continue to need inspections for however long it lasts plus ~$3000 cash.  The total invested is the same both ways (initial $3000 plus $240 per year), it is the outcome that differs.  In the one case your recurring expense ends, in the other it continues as long as you own the propeller.

[MIm20c]

2 hours ago, Browncbr1 said:

that's what happened to the previous owner of my plane.   The shops refused to inspect or service the original prop, so be bought a new top prop, then i bought the plane with 160 hours on the new top prop.... the way he explained it to me, he had no choice.

I would run from a shop like that. Because no matter what you’re getting a $8k overhaul or an over priced (heavily marked up) top prop when they have you by the balls. 

[skydvrboy]

22 minutes ago, mooniac15u said:

My calculation doesn't assume any particular value at 7 years.  The value would be comparable between the two propellers with the new hub presumably having a higher resale value.  The values I'm talking about are cash assets.  $3000 spent up front on a hub with $240 savings per year put into an account vs sequestering the $3000 ($2760) and leveraging the interest.  With the up front investment you finish with an AD-free hub at whatever residual value plus ~$3000 cash.  With the continued ECI path you end up with a hub that will continue to need inspections for however long it lasts plus ~$3000 cash.  The total invested is the same both ways (initial $3000 plus $240 per year), it is the outcome that differs.  In the one case your recurring expense ends, in the other it continues as long as you own the propeller.

No, if you spend $3,000 today and invest the $20 a month @ 10% for 7 years, at the end you will have $2,419.  If you invest the $3,000 today and spend the $20 a month, at the end you will have $6,024.  The total spent is the same either way $3000 this year and $20 a month, and yes, it is the outcome that differs, but not in the way you are thinking.

[mooniac15u]

16 minutes ago, skydvrboy said:

No, if you spend $3,000 today and invest the $20 a month @ 10% for 7 years, at the end you will have $2,419.  If you invest the $3,000 today and spend the $20 a month, at the end you will have $6,024.  The total spent is the same either way $3000 this year and $20 a month, and yes, it is the outcome that differs, but not in the way you are thinking.

See my previous post.  I said 8 years to get to $3000.

$2760 is what you have to invest after paying for the ECI in year one.  Otherwise your outlay is $3240.  Investing $2760 at 9% and spending all the interest leaves you with ~$3000 at the end of any timeframe.

Realistically you can expect 7% from the market so you would need to sequester about $3030 to get $240 in return each year.  At the same 7% you need 9 years to get back to $3000 with annual deposits of $240.

At the end of 9 years (based on 7%) you have:

a) ~$3000 in cash and a propeller (requiring additional investment in ECI each year).

or

b ) ~$3000 in cash and a propeller (with no additional investment needed)

In neither case do you end up with $6024.

[skydvrboy]

1 hour ago, mooniac15u said:

See my previous post.  I said 8 years to get to $3000.

$2760 is what you have to invest after paying for the ECI in year one.  Otherwise your outlay is $3240.  Investing $2760 at 9% and spending all the interest leaves you with ~$3000 at the end of any timeframe.

Realistically you can expect 7% from the market so you would need to sequester about $3030 to get $240 in return each year.  At the same 7% you need 9 years to get back to $3000 with annual deposits of $240.

At the end of 9 years (based on 7%) you have:

a) ~$3000 in cash and a propeller (requiring additional investment in ECI each year).

or

b ) ~$3000 in cash and a propeller (with no additional investment needed)

In neither case do you end up with $6024.

If you believe this so strongly, I've got a hell of a deal for you.  You send me the $2,760 today so I can buy the prop hub and I'll send you the $240 a year that I would have spent on the ECI.  I'll even pay you for the next 10 years instead of just 7.  PM me for the address where you can send the check.

[mooniac15u]

3 minutes ago, skydvrboy said:

If you believe this so strongly, I've got a hell of a deal for you.  You send me the $2,760 today so I can buy the prop hub and I'll send you the $240 a year that I would have spent on the ECI.  I'll even pay you for the next 10 years instead of just 7.  PM me for the address where you can send the check.

That makes no sense.  Of course I would get better return if I just invested the $2760 because I don't have a recurring expense (ECI) to funnel away the interest gains.  I also would not get any of the gains from investing in the new hub which come in the out years when you no longer have the recurring ECI expense.

 

[salty]

If you eventually upgrade, every inspection you pay for before the upgrade is flushed money.

Also is a huge negative when you try to sell, even though it's not that big a deal.

Edited March 22, 2018 by salty

[skydvrboy]

29 minutes ago, salty said:

If you eventually upgrade, every inspection you pay for before the upgrade is flushed money.

Not true.  The inspection money today keeps me flying.  Further, it delays the large expense until a time in the future.  You guys seem to think that money tomorrow is worth the same as money today.  Nothing could be further from the truth, as shown by Mooniac15u's reluctance to front me the money for the prop hub upgrade that he thinks is such a good investment.

[salty]

12 minutes ago, skydvrboy said:

Not true.  The inspection money today keeps me flying.  Further, it delays the large expense until a time in the future.  You guys seem to think that money tomorrow is worth the same as money today.  Nothing could be further from the truth, as shown by Mooniac15u's reluctance to front me the money for the prop hub upgrade that he thinks is such a good investment.

My statement is true. It is also true that opportunity costs factor in to your personal decision. 

If you never do the upgrade, then you saved money. If you ever do it, then you lost money. That is an unavoidable fact.

If an inspection reveals cracks, you get to pay for the inspection AND you can't fly (I'm assuming this based on your statement that the inspection is keeping you flying because you can't afford a new hub).

[skydvrboy]

Salty - Actually, the whole discussion stemmed from the fact that I can afford to do the hub upgrade, which leaves me with the option to upgrade or not.  If I couldn't afford the upgrade, then there are no options and I'd be stuck with the ECI.  Further, opportunity costs are REAL costs, so you don't necessarily lose money when you pay something now to delay a large expense.  To highlight the point lets exaggerate the numbers.  Let's say you could pay $10,000 today or pay $1 to delay that payment until next year.  You would still have to pay the $10,000 next year, so did you lose the $1 you spent to delay the expense?  I guess it depends on how you define "lose", but it's definitely a dollar I'd spend because of the opportunity cost of spending the $10,000 today.

Mooniac15u - Reviewing your post, I see where you went wrong and came up with numbers that were off.  Using all your numbers... you are correct in assuming that if you invested ~$3000 now and used the earnings to pay the ECI, that you would end up with ~$3000 and an ongoing ECI expense at the end.  However, when you spend your ~$3000 upfront to eliminate the AD, you wouldn't also have $240 to invest every year.  Where would that money come from?  In the previous example it would come from the investment, but if you spent the money upfront it would have to come out of your pocket.  So at the end of the 7 years, you would have $0 and a no ongoing ECI expense.  If you still think the prop hub is a great investment, I'm still willing to let you invest in my prop hub and I'll pay you the ECI cost .

[salty]

1 hour ago, skydvrboy said:

Salty - Actually, the whole discussion stemmed from the fact that I can afford to do the hub upgrade, which leaves me with the option to upgrade or not.  If I couldn't afford the upgrade, then there are no options and I'd be stuck with the ECI.  Further, opportunity costs are REAL costs, so you don't necessarily lose money when you pay something now to delay a large expense.  To highlight the point lets exaggerate the numbers.  Let's say you could pay $10,000 today or pay $1 to delay that payment until next year.  You would still have to pay the $10,000 next year, so did you lose the $1 you spent to delay the expense?  I guess it depends on how you define "lose", but it's definitely a dollar I'd spend because of the opportunity cost of spending the $10,000 today.

Mooniac15u - Reviewing your post, I see where you went wrong and came up with numbers that were off.  Using all your numbers... you are correct in assuming that if you invested ~$3000 now and used the earnings to pay the ECI, that you would end up with ~$3000 and an ongoing ECI expense at the end.  However, when you spend your ~$3000 upfront to eliminate the AD, you wouldn't also have $240 to invest every year.  Where would that money come from?  In the previous example it would come from the investment, but if you spent the money upfront it would have to come out of your pocket.  So at the end of the 7 years, you would have $0 and a no ongoing ECI expense.  If you still think the prop hub is a great investment, I'm still willing to let you invest in my prop hub and I'll pay you the ECI cost .

I agree. Just to be clear I define lost money to mean I give it to someone never to get it back again. 

Edited March 22, 2018 by salty

[MIm20c]

You guys are making my head spin. So what is the ROI if the new top prop gets dinged a week after installation?