Hello - I am trying to find a formula to work out the Net Present Value for a comparison of old equipment versus new equipment. I would rather not give values as I would like to learn and work through it myself. However, in relation to the old equipment I know the following:

-current trade-in value
-annual maintenance cost
-if the old equipment remains, it will be in service for the next 5 years.

First things first. I am assuming that I need to work out the NPV for the old and new equipment separately and then do a comparison. I have researched how to do the comparison but haven't worked out how to get the NPV! The data given for the new equipment option varies quite significantly (reqd rate of rtn, initial cost etc).

I am after a formula to work out firstly the NPV for the old equipment using the data in the list above. I have searched for a formula but have only be able to find one that relates to discount values over a number of years and such. Do I use any of the data from the new equipment option? I wouldn't have thought so but I haven't got very far yet.

Any help is gladly accepted to get me started with this comparison.

Thank you,

Brit.

Just to clarify, I have found some reseach about working out the NPV of replacing old equipment. However, in my question, I am required to calculate the NPV for EACH of the two options (keeping old stuff or getting new). Thank you.

Brit.

From going over a number of different textbooks, I think I have kick-started myself in slowly putting this question together. Not sure how successful, but am trying. So help is no longer requested.Thanks.