MGMT340_EXAMPLE_TVM

MGMT340_EXAMPLE_TVM - 1 0.89 0.8 0.71 0.64 0.57 PV of...

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Time Value of Money Analysis YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 TOTAL Net Economic Benefit Discount Rate( .12) PV of Benefits NPV of all Benefits One-Time Costs Recurring Costs Discount Rate( .12) PV of Recurring Costs NPV of all Costs Overall NPV Overall ROI Break-even Analysis Yearly NPV Cash Flow Overall NPV Cash Flow Break Even Occurs between years 1 and 2. Use the First year of positive cash flow to calculate break-even fraction Actual break-even occurs at 1.97 years.
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YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 Net Economic Benefit $0 $85,000 $85,000 $85,000 $85,000 $85,000 0.12 1 0.89286 0.8 0.71 0.64 0.57 PV of Benefits $0 $75,893 $67,761 $60,501 $54,019 $48,231 NPV of all Benefits $0 $75,893 $143,654 $204,156 $258,175 $306,406 One-Time Costs $75,000 Recurring Costs $0 $40,000 $40,000 $40,000 $40,000 $40,000 Discount Rate( .12)
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Unformatted text preview: 1 0.89 0.8 0.71 0.64 0.57 PV of Recurring Costs $0 $35,714 $31,888 $28,471 $25,421 $22,697 NPV of all Costs $75,000 $110,714 $142,602 $171,073 $196,494 $219,191 Overall NPV Overall ROI Break-even Analysis Yearly NPV Cash Flow ($75,000) $40,179 $35,874 $32,030 $28,598 $25,534 Overall NPV Cash Flow ($75,000) ($34,821) $1,052 $33,082 $61,681 $87,215 In this example, Use the First year of positive cash flow to calculate break-even fraction ((35,874 - 1,052) / 3 Actual break-even occurs at 1.97 years. Break Even Occurs between years where row 30 changes from negative (in red) to a positive number (in blac last year row 30 is in the red, would be the whole number for the Break Even calculation. TOTAL $306,406 $219,191 $87,215 0.40 35,874) = .971 ck). The...
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This note was uploaded on 12/28/2010 for the course MGMT 340 taught by Professor Kerns during the Spring '10 term at DeVry Columbus North.

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MGMT340_EXAMPLE_TVM - 1 0.89 0.8 0.71 0.64 0.57 PV of...

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