(this question will be answered most easily with the help of a spreadsheet like excel, but you're not required to use one.) You are considering on
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(this question will be answered most easily with the help of a spreadsheet like excel, but you're not required to

use one.)

You are considering on buying a shiny new car that you expect will last for ten years. Owning and driving the car will provide you with enjoyment and benefits worth $5,000 for each of the ten years, beginning immediately. On the cost side, you will have to pay $8,000 immediately and annual installments of $4,000 for four years thereafter. Annual costs of fuel, insurance and maintenance will be $2,000 per year, also beginning immediately.

a) if your discount rate is 4%, what is the present discount value (PDV) of the car's benefits from today's perspective?

b) if your discount rate is 4%, what is the present discount value (PDV) of the costs from today's perspective?


for a, my answer came out to be $42,177

for b, my answer came out to be $39,390

am I correct?

Top Answer

a).PDV of car benefits=... View the full answer

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