| PRESENT VALUE ANALYSIS |
| LAST REVISION: | 41937.0 |
| FILENAME: | SCM 350 Assignments |
| Developer: | John Wu, jwu@csusb.edu, x77437 |
| Scenarios: | 1. Two lease options with varying lengths but equal rate on the same project. |
| | 2. Which lease option has the lowest cost? By how much? |
| | 3. If the two options were to be equal, what would be the interest rate? |
| INPUT: | | | Rate | Option 1 | Option 2 |
| | Option 1 | Option 2 | 3.00% |
| Interest Rate | 5.00% | 5.00% | 4.00% |
| Years | 5 | 10 | 5.00% |
| Annual Lease Payment | $1,000.00 | $400.00 | 6.00% |
| End-of-period Payment | $500.00 | $3,000.00 | 7.00% |
| Total Payment | | | 8.00% |
| OUTPUT: | | | 9.00% |
| Net Present Value (PV) |
| Difference |