Question: Hi, Im supposed to make a net present value analysis for three different investments a diesel truck, an electric truck, and a biogas truck. I
Hi, Im supposed to make a net present value analysis for three different investments a diesel truck, an electric truck, and a biogas truck.
I can make up all the specifics myself, so I have chosen a discount rate of 10%, that all the trucks are used for 10 years (is 5 years more realistic?). Im a little unsure about the prices of the trucks, but I chose these numbers. I would appreciate if someone corrected the numbers if Im way off market price:
The diesel truck is bought new for 100 000$ and the salvage value is 20 000$. The annual fuel cost is 10 000$.
The electric truck is bought new for 150 000$ and the salvage value is 30 000$. The annual fuel cost is 5000$.
The biogas truck is bought new for 120 000$ and the salvage value is 25 000$. The annual fuel cost is 8000$.
I havent decided whether to incorporate reparations and other operating costs into the NPV analysis. So I need your help to know what else I should incorporate. I would be very grateful if someone could show me an example of what to do.
My analysis so far:
Diesel truck:
NPV = (-$100,000) + (-$10,000 / 1.1) + ... + (-$10,000 / 1.1^9) + ($20,000 / 1.1^10)
NPV = -$72,415.47
Electric truck:
NPV = (-$150,000) + (-$5,000 / 1.1) + ... + (-$5,000 / 1.1^9) + ($30,000 / 1.1^10)
NPV = -$81,010.88
Biogas truck:
NPV = (-$120,000) + (-$8,000 / 1.1) + ... + (-$8,000 / 1.1^9) + ($25,000 / 1.1^10)
NPV = -$76,063.27
I really appreciate help. Im all new to this and dont really know what to include or not to my analysis.
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