gbpfan1231 Posted May 28, 2009 Share Posted May 28, 2009 If we spent $7,200.00 right now and then received cash back of $300 quarterly for the year ($1,200) for a total cash outlay of $6,000 at year end versus spending $600.00 monthly for a year for a total cash outlay of $7,200. Assume 10% cost of capital. What is the better option? Could someone explain how I could do this in Excel? Quote Link to comment Share on other sites More sharing options...
geeteebee Posted May 28, 2009 Share Posted May 28, 2009 (edited) Your first option appears to be better with an NPV of ($5,923) vs. the other of ($6,824.71). I just did an NPV formula in excel, making sure the interest rate was for the correct period 10%/4 for scenario 1 and 10%/12 for #2. ETA: Actually there is also an XNPV function, similar to the XIRR function that will take into account the exact dates of the cash flows that answer returns ($6,069) for option 1 vs. ($6,893) for option 2. Edited May 28, 2009 by geeteebee Quote Link to comment Share on other sites More sharing options...
muck Posted May 29, 2009 Share Posted May 29, 2009 (edited) ETA: Actually there is also an XNPV function, similar to the XIRR function that will take into account the exact dates of the cash flows... Edited May 29, 2009 by muck Quote Link to comment Share on other sites More sharing options...
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