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Using the values in the table and assuming a 6-year project life with a 4% annual discount rate, calculate: A) the NPV of the previous
Using the values in the table and assuming a 6-year project life with a 4% annual discount rate, calculate:
A) the NPV of the previous product;
B) the NPV of the New Product;
C) the NPV of the total savings over the 6-year assumed life of the project.
Previous Product New Product Annual Cost Capital Investment New Annual Cost Annual Savings & (costs) Wheel Weights $175 $644 $730 (5555) Paint Gun Washer $700* $1,912.50 $30 $643 Brake Cleaning & General Degreasing $2,000 0 $475 $1,525 Wheel Cleaning $300 0 $542 ($242) Total Annual Savings: $1,371 Previous Product New Product Annual Cost Capital Investment New Annual Cost Annual Savings & (costs) Wheel Weights $175 $644 $730 (5555) Paint Gun Washer $700* $1,912.50 $30 $643 Brake Cleaning & General Degreasing $2,000 0 $475 $1,525 Wheel Cleaning $300 0 $542 ($242) Total Annual Savings: $1,371Step by Step Solution
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