Scenario:

Your brother is a mechanic, and he says he can keep it running and you don't need a new truck. Currently, that truck is responsible for $$15,000$ of REVENUE per month,

to the new truck being in the shop less, your new REVENUE would be $$16,000$ per month.

accounting for the interest rate and the number of periods.

Use the Excel file provided to build a model that includes all of this information.

Calculate the Monthly income under each scenario, the incremental difference in the investment per month, and over time, and the NPV of each choice $($truck$/$no truck$).$

ASSUME THAT THEY MAKE THE DOWN PAYMENT AND THE FIRST MONTH'S PAYMENT IN MONTH ONE.

Answer the following questions:

What is the NPV of each scenario $($no truck$/$truck$)?$ Use a Discount rate $=$ to the loan rate.

During what month does the investment break even $($or does it ever break even$)?$

What is the monthly loan payment?

Getting an MBA Not getting an MBA Incremental Value of MBA

NPV: NPV: NPV:

Age Age Age

$252525$

$262626$

$272727$

$282828$

$292929$

$303030$

$313131$

$323232$

$333333$

$343434$

$353535$

$363636$

$373737$

$383838$

$393939$

$404040$

$414141$

$424242$