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Qestion below pictures, can you help me to correct incremental cost approach in excel file? I know the answer should be NPV in favor of
Qestion below pictures, can you help me to correct incremental cost approach in excel file? I know the answer should be NPV in favor of overhauling the old truck. 16% 1 Data Block 2 Bilboa Freightlines 3 4 Required Rate of Return 5 6 7 8 Purchase cost new 9 Overhaul needed now 10 Annual cash operating costs 11 Salvage value now 12 Salvage value five years from now 13 14 $ $ $ Present Truck $ (7,000) (10,000) $ 9,000 1,000 New Year/ Annuity Truck Periods vs Single Sum (30,000) 0 Single Sum 0 Single Sum (6,500) 5 Annuity 0 Single Sum 4,000 5 Single Sum U Bilboa Freightlines, S.A. Total Cost Approach Net Present Value Calculation Amount of Year(s) Cash Flows PV Item Overhaul old truck: Overhaul now Annual cash operating costs 2 Salvage value in five years Net Present Value $ OOO 5 5 (7,000) $ (10,000) 1,000 $ (7,000) (32,743) 476 (39,267) Purchase new truck: Purchase cost new Salvage value of old truck now Annual cash operating costs Salvage value of new truck in five years Net Present Value 5 5 $ (30,000) $ 9,000 (6,500) 4,000 $ (30,000) 9,000 (21 283) 1,904 (40,378) NPV in favor of overehauling the old truck $ (1,112) Bilboa Freightlines, S.A Incremental Approach Net Present Vall Calculation Item Year(s) Amount of Cash Flows PV 0 $ Incremental investment - in favor of old truck Additional annual cash operating costs Lost salvage value in five years Lost salvage value for old truck now 0 5 5 23,000 $ 9,000 (3,500) (3,000) 23,000 (9,000) (11,460) (1,428) NPV in favor of purchasing the new truck 1,112
Qestion below pictures, can you help me to correct incremental cost approach in excel file? I know the answer should be NPV in favor of overhauling the old truck.
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