Dawson_LO16-S18.xlsx - Option 1 Net Present Value Discount Rate = Cost of cars = Annual Savings = Life Span = 7 200,000.00 20,000.00 4 years $ $ NPV =

Dawson_LO16-S18.xlsx - Option 1 Net Present Value Discount...

This preview shows page 1 - 2 out of 2 pages.

Option 1 - Net Present Value Discount Rate = 7% Cost of cars = $ 200,000.00 Annual Savings = $ 20,000.00 Life Span = 4 years NPV = Annual Savings / (1+r) = ` YEAR SAVINGS NPV 7% D.R. 1 $20,000.00 $18,691.59 0.935 2 $20,000.00 $17,468.77 0.873 3 $20,000.00 $16,325.96 0.816 4 $20,000.00 $15,257.90 0.763 Amount Invested = $ 200,000.00 Total Present Value of Savings = $67,744.23 Total Present Value of Annual Savings = $67,744.23 Net Present Value (NPV) = $132,255.77 Explanation: Option 2 - Net Present Value Discount rate = 5% Cost of cars = $185,000 Annual Savings = 90,000 Life span = 5 years NPV = Annual Savings / (1+r) = YEAR SAVINGS NPV 5% D.R. 1 $90,000.00 $85,714.29 0.952 2 $90,000.00 $81,632.65 0.907 3 $90,000.00 $77,745.38 0.864 4 $90,000.00 $74,043.22 0.823 5 $90,000.00 $70,517.35 0.784 Amount Invested = $185,000.00 Total Present Value of Savings = $389,652.90 Total Present Value of Annual Savings = $389,652.90 Net Present Value (NPV) =
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read both pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes