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2) The New World Soccer League is evaluating the purchase of a used van to transport...

2) The New World Soccer League is evaluating the purchase of a used van to transport equipment to games. The cost of the van is $10,000 and it is expected to have a useful life of three years. Insurance, maintenance and gas will cost $1,500 annually. At the end of three years it is expected the van could be sold for $2,500. By buying the van New World will save $3,700 annually on rental costs. Using a 11% discount rate/hurdle rate calculate the IRR and NPV. Ignore taxes and inflation. What decision should be made. Why?

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Answer #1

B149 X ✓ fx EIRR(B143:B147) Present value AxB -$10,000.00 $1,981.98 $1,785.57 $3,436.60 200 B C 141 Year Cash flows PVIF@11%

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