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View Full Version : Net Present Value


chabelo
Nov 20, 2006, 12:15 AM
Your company plans to acquire one of two assets. Asset A costs $162,500, and has expected annual cash savings of $37,500. Asset B costs $225,000, and has expected annual cash savings of $77,500. You'll use straight-line depreciation for both assets over their estimated useful lives of 5 years, after which both will have a salvage value of zero. Your minimum desired rate of return is 14%, and the present value factor is 3.4331.

Ignoring income taxes, calculate the net present value for both assets.

croketizame
Aug 25, 2007, 03:16 PM
Asset A: -33759.46
Asset B: 41063.77

This has been calculated in

NPV online calculator (http://www.discountingcashflow.com/npv-en-npv-net-present-value.php)