Sometimes some of the costs are so small that their inclusion will not
change the final decision. The costs of postage to mail a check to pay down a
loan would not usually be considered in the analysis. In Example 2.15 (the GI
insurance), the annual 2% costs were much smaller than the real estate tax
savings. However, you should always try to include all relevant costs and
returns before making a final investment decision.
Note that the word “return” can be somewhat ambiguous. It can mean
everything you get back from your investment, including the value of the orig-
inal investment. However, it could also mean simply the profit, or earnings,
from the investment. For example, if you buy a bond, receive the interest until
the bond matures, and get your money ...