Question
Your teacher's washing machine has broken down, which raises three options for washing her clothes: 1) buy a new washing machine, 2) repair the washing
Your teacher's washing machine has broken down, which raises three options for washing her clothes: 1) buy a new washing machine, 2) repair the washing machine, 3) wash her clothes at a laundry located near her house. Consider a 3-year time frame and a 5% discount rate. The teacher performs 3 laundries every two weeks (52 weeks / year). Scenario 1: A new washing machine costs 600 (year 0). The cost of the detergent is 10 and lasts for 20 washes. Scenario 2: The repair of the washing machine costs 250 (year 0). The technician recommends using an anti-lime detergent to extend the life of the washing machine for 3 more years. The detergent in this case costs 15 and lasts for 20 washes. Scenario 3: Each laundry costs 3 (includes detergent).
What option would you choose and why? (35 points)
a) Calculate the the NPV of scenario 1 (in Euros)?
b) Calculate the the NPV of scenario 2 i(in Euros)?
c) Calculate the the NPV of scenario 3 i(in Euros)?
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