net present value, Accounting Basics

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Planned Acquisition cost $2.1M

Salvage Value $0

16% discount rate

savings = year end


Savings:

year 1 150k

year 2 175k

year 3 300K

year 4 400k

year 5 475K

year 6 600K

year 7 725K

year 8 825K

year 9 875K

year 10 975K


total savings: $5.5M

Savings over acquisition cost $3.4M


Net Present Value ?

Payback in whole years?

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