Hello - I'm struggling with this problem below. I'm having trouble calculating the NPV. Thanks...
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Accounting
Hello - I'm struggling with this problem below. I'm having trouble calculating the NPV. Thanks for your help!
UPDATE - if this helps, the NPV at 100% was give as 2891.34
The Green Thumb Seed Company may purchase a new security system for it lab. The I Spy system costs $120,000, but will save $20,000 per year is other costs. The system is expected to last 10 years. These numbers are uncertain. The initial cost could be 30% higher or 20% lower, depending on what is found in an upcoming vendor visit. The annual savings could be 10% higher or 30% lower, depending on further research. The life of the system could be 10% longer or 30% shorter, depending on conditions.
Determine the NPV of the Base Case (the conditions we expect). Create a spiderplot containing 3 lines, one for each variable (cost, savings, and system life). Use the attached spreadsheet (page HW 7 #2) to help you draw the spiderplot.
Here's the data given in an excel spreadsheet:
I Spy | Hi | Lo | ||
Cost | 120000 | 30% | -20% | |
savings | 20000 | 10% | -30% | |
int. rate | 10% | |||
life, N | 10 | 10% | -30% | |
NPV | 2891.34 | |||
Cost | Savings | N | ||
70% | ||||
80% | ||||
90% | ||||
100% | 2891 | 2891 | 2891 | |
110% | ||||
120% | ||||
130% | ||||
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