B | Present Value(PV) of cash flow | ||||||||||||||
(Cash Flow)/((1+i)^N) | |||||||||||||||
i=discount rate =MARR=10%=0.1 | |||||||||||||||
N=Year of Cash Flow | |||||||||||||||
N | Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | |||
X | Number of miles of ditch per year | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | 60 | ||||
Caterpillar Mini Excavator: | |||||||||||||||
a | Initial Cost | $26,500 | |||||||||||||
b | Maintenance &Operating Cost per mile | $107 | $107 | $107 | $107 | $107 | $107 | $107 | $107 | $107 | $107 | ||||
c=X*b | Annual O&M Cost | $6,420 | $6,420 | $6,420 | $6,420 | $6,420 | $6,420 | $6,420 | $6,420 | $6,420 | $6,420 | ||||
d | Annual Fixed costs | $18,000 | $18,000 | $18,000 | $18,000 | $18,000 | $18,000 | $18,000 | $18,000 | $18,000 | $18,000 | ||||
e | Salvage Value | ($9,000) | |||||||||||||
f=a+c+d+e | Total Cash Outflow | $26,500 | $24,420 | $24,420 | $24,420 | $24,420 | $24,420 | $24,420 | $24,420 | $24,420 | $24,420 | $15,420 | SUM | ||
PV1=f/(1.1^N) | Present Value(PV) of Total cash flow | $26,500 | $22,200 | $20,182 | $18,347 | $16,679 | $15,163 | $13,784 | $12,531 | $11,392 | $10,356 | $5,945 | $173,080 | ||
NPW1 | Net Present Worth of Costs=Sum of PV | $173,080 | |||||||||||||
Toro Powered Rotary Tiller: | |||||||||||||||
g | Initial Cost | $1,200 | |||||||||||||
h | Maintenance &Operating Cost per mile | $580 | $580 | $580 | $580 | $580 | |||||||||
i=X*h | Annual O&M Cost | $34,800 | $34,800 | $34,800 | $34,800 | $34,800 | |||||||||
j=g+i | Cash Flow | $1,200 | $34,800 | $34,800 | $34,800 | $34,800 | $34,800 | ||||||||
k | Cash Flow for repeat investment | $1,200 | $34,800 | $34,800 | $34,800 | $34,800 | $34,800 | ||||||||
l=j+k | Total Cash Outflow | $1,200 | $34,800 | $34,800 | $34,800 | $34,800 | $36,000 | $34,800 | $34,800 | $34,800 | $34,800 | $34,800 | SUM | ||
PV2=l/(1.1^N) | Present Value(PV) of Total cash flow | $1,200 | $31,636 | $28,760 | $26,146 | $23,769 | $22,353 | $19,644 | $17,858 | $16,234 | $14,759 | $13,417 | $215,776 | ||
NPW2 | Net Present Worth of Costs=Sum of PV | $215,776 | |||||||||||||
Net Present Worth of Costs is lower for Caterpillar Mini Excavator | |||||||||||||||
Caterpillar Mini Excavator is recommended | |||||||||||||||
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An irrigation canal contractor wants to determine whether he should purchase a used Caterpillar mini excavator,...