Question

What is the NPV for the car selection example below?

Example: Buy an Electric Vehicle?

Chevy Malibu: $30,000 cost  12K miles/yr  30 mph  Maintenance: $1K in year 1; 5% CAGR  Resale of $5K in ten years  Gas: $3.50/g; 10% CAGR  D = 7% 

Nissan Leaf: $40,000 cost  12K miles/yr  5 miles per kWh  Maintenance: $700 in year 1; 5% CAGR  New battery in year 5: $5,000  Resale of $3K in ten years  $0.11/kWh; 10% CAGR  D = 7%

Answer 1

Using formula, PV = FV / (1+r)ⁿ

CHEVY MALIBU

Year	Cashflow Component	Cash Flow	PV
-	Initial Cost	30,000.00	30,000.00
1	Maintenance Cost	1,000.00	934.58
2	Maintenance Cost	1,050.00	917.11
3	Maintenance Cost	1,102.50	899.97
4	Maintenance Cost	1,157.63	883.15
5	Maintenance Cost	1,215.51	866.64
6	Maintenance Cost	1,276.28	850.44
7	Maintenance Cost	1,340.10	834.54
8	Maintenance Cost	1,407.10	818.95
9	Maintenance Cost	1,477.46	803.64
10	Maintenance Cost	1,551.33	788.62
1	Gas	1,400.00	1,308.41
2	Gas	1,540.00	1,345.10
3	Gas	1,694.00	1,382.81
4	Gas	1,863.40	1,421.58
5	Gas	2,049.74	1,461.44
6	Gas	2,254.71	1,502.41
7	Gas	2,480.19	1,544.53
8	Gas	2,728.20	1,587.84
9	Gas	3,001.02	1,632.36
10	Gas	3,301.13	1,678.13
10	Resale	(5,000.00)	(2,541.75)

NPV = Sum of all PVs = $50,920.48

NISSAN LEAF

Year	Cashflow Component	Cash Flow	PV
-	Initial Cost	40,000.00	40,000.00
1	Maintenance Cost	700.00	654.21
2	Maintenance Cost	735.00	641.98
3	Maintenance Cost	771.75	629.98
4	Maintenance Cost	810.34	618.20
5	Maintenance Cost	850.85	606.65
6	Maintenance Cost	893.40	595.31
7	Maintenance Cost	938.07	584.18
8	Maintenance Cost	984.97	573.26
9	Maintenance Cost	1,034.22	562.55
10	Maintenance Cost	1,085.93	552.03
1	Electricity	264.00	246.73
2	Electricity	290.40	253.65
3	Electricity	319.44	260.76
4	Electricity	351.38	268.07
5	Electricity	386.52	275.59
6	Electricity	425.17	283.31
7	Electricity	467.69	291.26
8	Electricity	514.46	299.42
9	Electricity	565.91	307.82
10	Electricity	622.50	316.45
5	New Battery	5,000.00	3,564.93
10	Resale	(3,000.00)	(1,525.05)

NPV = 50,861.26

The NPV of Nissan Leaf is lower than Malibu, so one could go for Nissan Leaf. But the difference is not much.