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    Test #3 Review - Loan and NPV 2

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    nikhil.dharmavaram
    The document outlines the terms of a $23,000 loan taken out at 5.75% annual interest over 36 months to purchase a car. It shows the monthly payment breakdown between principal and interest. It then compares the cash flows and net present values of buying the car versus leasing it over 5 years, determining that buying the car has a less negative NPV and is therefore the better financial option.

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    Test #3 Review - Loan and NPV 2

    Uploaded by

    nikhil.dharmavaram
    7 views2 pages
    The document outlines the terms of a $23,000 loan taken out at 5.75% annual interest over 36 months to purchase a car. It shows the monthly payment breakdown between principal and interest. It then compares the cash flows and net present values of buying the car versus leasing it over 5 years, determining that buying the car has a less negative NPV and is therefore the better financial option.

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    The document outlines the terms of a $23,000 loan taken out at 5.75% annual interest over 36 months to purchase a car. It shows the monthly payment breakdown between principal and interest. It then compares the cash flows and net present values of buying the car versus leasing it over 5 years, determining that buying the car has a less negative NPV and is therefore the better financial option.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    7 views2 pages

    Test #3 Review - Loan and NPV 2

    Uploaded by

    nikhil.dharmavaram
    The document outlines the terms of a $23,000 loan taken out at 5.75% annual interest over 36 months to purchase a car. It shows the monthly payment breakdown between principal and interest. It then compares the cash flows and net present values of buying the car versus leasing it over 5 years, determining that buying the car has a less negative NPV and is therefore the better financial option.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 2

    Loan $23,000 Discount Rate

    Interest 5.75% Annual


    Interest 0.479% Monthly Buy Car
    Term 36 Year
    Purchase Price
    Mo Payment Principal Interest 5 yr. no interest loan payment
    1 $697.10 $586.89 $110.21 Battery
    2 $697.10 $589.71 $107.40 Starter
    3 $697.10 $592.53 $104.57 Tires
    4 $697.10 $595.37 $101.73 Sales Price
    5 $697.10 $598.22 $98.88 Cash Flow
    6 $697.10 $601.09 $96.01 Present Value
    7 $697.10 $603.97 $93.13 Net Present Value
    8 $697.10 $606.86 $90.24
    9 $697.10 $609.77 $87.33 Lease Car
    10 $697.10 $612.69 $84.41 Year
    11 $697.10 $615.63 $81.47 Initial Lease Payment
    12 $697.10 $618.58 $78.52 Annual Lease Payment
    13 $697.10 $621.54 $75.56 Over Mileage Charge
    14 $697.10 $624.52 $72.58 Cleaning - Repair
    15 $697.10 $627.51 $69.59 Cash Flow
    16 $697.10 $630.52 $66.58 Present Value
    17 $697.10 $633.54 $63.56 Net Present Value
    18 $697.10 $636.58 $60.52
    19 $697.10 $639.63 $57.47 Buy the Car - It has a less negative NPV
    20 $697.10 $642.69 $54.41
    21 $697.10 $645.77 $51.33
    22 $697.10 $648.87 $48.23
    23 $697.10 $651.98 $45.13
    24 $697.10 $655.10 $42.00
    25 $697.10 $658.24 $38.86
    26 $697.10 $661.39 $35.71
    27 $697.10 $664.56 $32.54
    28 $697.10 $667.75 $29.35
    29 $697.10 $670.95 $26.16
    30 $697.10 $674.16 $22.94
    31 $697.10 $677.39 $19.71
    32 $697.10 $680.64 $16.46
    33 $697.10 $683.90 $13.20
    34 $697.10 $687.18 $9.93
    35 $697.10 $690.47 $6.63
    36 $697.10 $693.78 $3.32
    Sum $23,000.00 $2,095.68
    10.00%

    0 1 2 3 4 5

    -5,000 -5,000 -5,000 -5,000 -5,000


    -75
    -150
    -450
    15,500
    0 -5,075 -5,000 -5,150 -5,000 10,050
    0 -4,614 -4,132 -3,869 -3,415 6,240
    -$9,790

    0 1 2 3 4 5
    -4,500
    -3,050 -3,050 -3,050 -3,050 -3,050
    -1,200
    -700
    -4,500 -3,050 -3,050 -3,050 -3,050 -4,950
    -4,500 -2,773 -2,521 -2,292 -2,083 -3,074
    -$17,242

    ess negative NPV

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