NPV Example
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Discount Rate10%
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Setup cost$150,000.00
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One year variable cost
$150,000.00
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One year income$400,000.00
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One Machine Example
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Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Year 11Year 12Year 13Year 14Year 15Year 16Year 17Year 18Year 19Year 20
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Setup-$150,000
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Variable costs/revenue
-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000
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Total-$300,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000-$150,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000
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Present Value-$300,000-$136,364-$123,967-$112,697-$102,452-$93,138-$84,671-$76,974-$69,976-$63,615$154,217$140,198$127,452$115,866$105,333$95,757$87,052$79,138$71,944$65,403
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Net Present Value
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-$121,495
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Two Machine Example
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Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Year 11Year 12Year 13Year 14Year 15
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Setup-$300,000
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Variable costs/revenue
-$300,000-$300,000-$300,000-$300,000-$300,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000
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Total-$600,000-$300,000-$300,000-$300,000-$300,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000
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Present Value-$600,000-$272,727-$247,934-$225,394-$204,904$248,369$225,790$205,263$186,603$169,639$154,217$140,198$127,452$115,866$105,333
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Net Present Value
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$127,769
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Ten Machine Example
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Year 1Year 2Year 3Year 4Year 5Year 6Year 7Year 8Year 9Year 10Year 11
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Setup-$1,500,000
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Variable costs/revenue
-$1,500,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000
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Total-$3,000,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000$400,000
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Present Value-$3,000,000$363,636$330,579$300,526$273,205$248,369$225,790$205,263$186,603$169,639$154,217
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Net Present Value
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-$542,173
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