I am trying to figure out the value of prepaying my Internet bill for 1 year in
advance, and I am getting myself confused.

Present fee is $34.95/month
There is planned $5/month increase beginning 9/1.

I can pay one year in advance at the old rate =34.95*12 -- $419.40

Or I can pay monthly fees of $39.95 for the next 12 months.

If I pay the annual fee, I think my cash flow equivalent looks like:

9/1/2008 -$419.40
9/1/2008 $39.95
10/1/2008 $39.95
11/1/2008 $39.95
12/1/2008 $39.95
1/1/2009 $39.95
2/1/2009 $39.95
3/1/2009 $39.95
4/1/2009 $39.95
5/1/2009 $39.95
6/1/2009 $39.95
7/1/2009 $39.95
8/1/2009 $39.95

and XIRR calculates to 35.1% Empirically, that seems too high, for the savings
involved.

I tried using Goal Seek to determine the interest rate for the PV calculation
that would give the cash flow of $39.95*12 a PV of $419.40, and that comes out
to a periodic rate of 2.12%

Suggestions please.

Thanks.
--ron