Project 1 Calculations must be done in Excel Fergy Smith, the financial advisor to Uncovered Car...

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Project 1 Calculations must be done in Excel
Fergy Smith, the financial advisor to Uncovered Car Rentals isevaluating the following types of cars to
add to the fleet:-
Topless:- A sporty convertible with a cost of $100,000 and auseful life of 5 years. It will produce rental income of $60,000per year and operating costs of $10,000 per year. A major serviceis required after 3 years costing $15,000. A salvage value of$25,000 is expected after 5 Years. The required return is10%.
Canopy:- A rugged off road vehicle costing $150,000 but withan expected useful life of only 3 years, due to the harshconditions. It will produce rental income of $100,000 per year andoperating costs of $20,000 per year. A major service is requiredafter 2 years costing $10,000. A salvage value of $50,000 isexpected after 3 Years. The required rate of return is 12%.
Income tax can be ignored.
Required
(1) The NPV’s of the two cars.
(2) An analysis of the two cars assuming they are mutuallyexclusive and can be repeated indefinitely.

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Project 1 Calculations must be done in ExcelFergy Smith, the financial advisor to Uncovered Car Rentals isevaluating the following types of cars toadd to the fleet:-Topless:- A sporty convertible with a cost of $100,000 and auseful life of 5 years. It will produce rental income of $60,000per year and operating costs of $10,000 per year. A major serviceis required after 3 years costing $15,000. A salvage value of$25,000 is expected after 5 Years. The required return is10%.Canopy:- A rugged off road vehicle costing $150,000 but withan expected useful life of only 3 years, due to the harshconditions. It will produce rental income of $100,000 per year andoperating costs of $20,000 per year. A major service is requiredafter 2 years costing $10,000. A salvage value of $50,000 isexpected after 3 Years. The required rate of return is 12%.Income tax can be ignored.Required(1) The NPV’s of the two cars.(2) An analysis of the two cars assuming they are mutuallyexclusive and can be repeated indefinitely.