Hello - I'm struggling with this problem below. I'm having trouble calculating the NPV. Thanks...
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Hello - I'm struggling with this problem below. I'm having trouble calculating the NPV. Thanks for your help!
UPDATE - if this helps, the NPV at 100% was give as 2891.34
The Green Thumb Seed Company may purchase a new security system for it lab. The I Spy system costs $120,000, but will save $20,000 per year is other costs. The system is expected to last 10 years. These numbers are uncertain. The initial cost could be 30% higher or 20% lower, depending on what is found in an upcoming vendor visit. The annual savings could be 10% higher or 30% lower, depending on further research. The life of the system could be 10% longer or 30% shorter, depending on conditions.
Determine the NPV of the Base Case (the conditions we expect). Create a spiderplot containing 3 lines, one for each variable (cost, savings, and system life). Use the attached spreadsheet (page HW 7 #2) to help you draw the spiderplot.
Here's the data given in an excel spreadsheet:
I Spy
Hi
Lo
Cost
120000
30%
-20%
savings
20000
10%
-30%
int. rate
10%
life, N
10
10%
-30%
NPV
2891.34
Cost
Savings
N
70%
80%
90%
100%
2891
2891
2891
110%
120%
130%
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