BUS 5110 Unit 6 Excel Calculation

Options 1
Year 0 Year 1 Year 2 Year 3
Revenues - $ 50,000.00 $ 113,000.00
Purchase $ (75,000.00)
Salvage
Maintenance $ (2,500.00) $ (2,500.00) $ (2,500.00)
Materials $ (20,000.00) $ (10,000.00) $ (10,000.00)
Labor $ (50,000.00) $ (51,500.00) $ (53,045.00)
Total Cash in (Out) $ (75,000.00) $ (72,500.00) $ (14,000.00) $ 47,455.00
Payback Method $ (75,000.00) $(147,500.00) $(161,500.00) $(114,045.00)
r 0.08 $ 59,715.22
r 0.07 16.23% End of Year 5

Options 2
Year 0 Year 1 Year 2 Year 3
Revenues - $ 75,000.00 $ 100,000.00
Purchase $ (50,000.00)
Salvage
Maintenance $ (4,500.00) $ (4,500.00) $ (4,500.00)
Materials $ (25,000.00) $ (20,000.00) $ (20,000.00)
Labor $ (70,000.00) $ (72,100.00) $ (74,263.00)
Total Cash in (Out) $ (50,000.00) $ (99,500.00) $ (21,600.00) $ 1,237.00
PV factor (r=8%) 1.0000 0.9259 0.8573 0.7938
IRR at r = 5.51% 1.0000 0.9479 0.8985 0.8516
Present Value $ (50,000.00) $ (94,312.80) $ (19,406.57) $ 1,053.45
Payback Method $ (50,000.00) $(149,500.00) $(171,100.00) $(169,863.00)
r 0.08 $ (17,318.10)
r 0.07 5.51%
End of Year 6

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