F MOD 3 WK 2 POST: Thomas & Kelvin

RESPOND TO THOMAS & KELVIN WITH 135 WORDS PER RESPONSE
Thomas Chester
Net Present value presents the estimation of the value of an investment or an opportunity. In this case, the savings made by the purchase of an item may be considered to have a positive or negative NPV depending on the savings it makes. I intend to purchase a comfort bicycle that costs $650. The bicycle should serve me for at least four years. I plan to cycle to school four times a week. Currently, I use $3.5 to commute to school. In this case, the total savings that the bicycle will make will be $14 per week, which is similar to ($14 * 25 weeks a year) = $350. I will incur annual maintenance cost of $150. In this case, the net savings from the bicycle will be ($350-$150) = $200.
I intend to use a discounting factor of 10%. In this case, the NPV of the bicycle will be $1,093.43 after subtracting the initial cost of -$16.03. The total NPV of the bicycle is negative. However, the bicycle shall have made significant savings each year, which makes it essential to purchase it. First, the bicycle will save me from the trouble of having to be worried about missing the bus or the train. In this case, I will have peace of mind. Second, the bicycle will not only help me get to school but will also be used to go to other areas, making it have more benefits than just the school. Third, the high flexibility of the bicycle and the lower maintenance per year make it be a better buy even if it does not return the initial costs as indicated by the NPV.
Kelvin Ison
Hello Everyone,
The net present value is the present value of the money flows at the rate of return needed for your project compared with your original investment (Gallo, 2014). Net present value is one of the most useful financial decision-making instruments. NPV is used to estimate whether a specific purchase or investment is worth more in the long term than merely investing an equivalent amount of money in a savings account at the bank. I have a $250,000 and want to invest for getting good returns in the future, and save me money. A few weeks ago, I purchased a property with the intention of making some trash and minor repairs and reselling to another investor. I think that investing in property is a good idea, so I bought a house for $250,000. I later sold the estate and got a $300,000 offer. But for the next ten years, the offer was contingent on funding nothing down and paying $2500. If he had given me $375,000 for the estate, with ten years payments of $3125 a month, that would also be an interest-free loan, but I believe we all agree that it would be a much better offer. I think that this option should be useful for me for future earnings. Using NPV, we can determine what would be appreciated today for any amount of future payments of particular amounts. If you remember, I stated that tomorrow's dollar is worth more than a dollar because you can spend it today and make it worth more tomorrow. If you could receive 1 percent of your investment's annual yields, for the next year or two, a dollar today will not be worth much more than the same dollar invested. But if you could earn a 50% return on that dollar's investment, having it today versus in a year or two might imply having the chance to double your cash over that period.