Q 1 What is the net present cost of the DSI cars Year LRP D


Q 1. What is the net present cost of the DSI cars ?
Year LRP DSI 0 $275,000 $195,000 1 $10,000 $15,000 2 $10,000 $15,000 3 $10,000 $15,000 4 $10,000$15,000 5 $10,000 $15,000 6 $10,000 $15,000 7 $10,000 8 $10,000 9 $10,000 10 $10,000 Given this information answer questions

Solution

Net present cost = 264,343.19

Discount rate 8.0000%
Cash flows Year Discounted CF= cash flows/(1+rate)^year Cumulative cash flow
           195,000.00 0                           195,000.00                       195,000.00
           15,000.000 1                             13,888.89                       208,888.89
           15,000.000 2                             12,860.08                       221,748.97
           15,000.000 3                             11,907.48                       233,656.45
           15,000.000 4                             11,025.45                       244,681.90
           15,000.000 5                             10,208.75                       254,890.65
           15,000.000 6                               9,452.54                       264,343.19
 Q 1. What is the net present cost of the DSI cars ? Year LRP DSI 0 $275,000 $195,000 1 $10,000 $15,000 2 $10,000 $15,000 3 $10,000 $15,000 4 $10,000$15,000 5 $

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