Data block

Bilboa Freightlines
required rate of return
present truck new truck
purchase cost (new) $21,000 $30,000
remaining book value $11,500
overhaul needed now $7,000
annual cash operating costs $10,000 $6,500
salvage value-now $9,000
salvage value-five years from now $1,000 $4,000
discount rate 16%
NPV $1,112 in favor of overhauling the old truck

Bilboa Freiightlines, S.A

Total Cost Approach
Net present value claculation
Item Year (s) Ammount of cash flows
Overhaul old truck: 0 $7,000
Overhaul now 0 $7,000
Annual cash oprating costs 5 $10,000
Salvage vale in five years 5 $1,000
Net present value

Purchase new truck:

Purchase cost new 5 $30,000
Salvage value of old truck now 0 $1,000
Annual cash operating costs 5 $6,500
Salvage vaue of new truck in five years 5 $4,000
Net Present Value

Logic 'IF' statents

Bilboa Freiightlines, S.A

Item
Increamental investment- in favour of old truch
additional annual cash operating cost
lost salvage value in five years
lost savage value for old truck now
Net Present Value
Increamental Cost Approach
Net present value claculation
Year (s) Ammount of cash flows
0 $9,000
5 $3,500
5 $3,000
0 $1,000

name and ZID#

Logic 'IF' statents

name and ZID#

 Year/Periods
5
0
0
5
0
5

s, S.A

on
PV
$7,000.00
$7,000.00
$4,761.13
$476.11
$19,237

$14,283.39
$1,000.00
$3,094.73
$1,904.45
$20,283

NPV in favor of overhauling the old truck

s, S.A
ch
on
PV
$9,000.00
$1,666.40
$1,428.34
$1,000.00
$13,095

name and ZID#

NPV in favor of overhauling the old truck

name and ZID#