Question

1. You run a business delivering fresh vegetables to boats anchored in Boston Harbor. You expect to make 20 deliveries on the last day of each week and to charge $100 for each delivery. The vegetables cost $40 per delivery. It will cost you $3000 to rent a motor boat for the summer to deliver the vegetables. Assuming that you pay the $3000 rent today and that you operate your delivery business for 15 weeks, what is the NPV of this investment at a discount rate of 5% APR?

I need help solving this using the hp10bii calculator please!

Answer 1

Formula	Week (n)	0	Cash flow/week
	Investment (I)	-3000
	Number of deliveries/week (d)		20
	Vegetable cost/delivery (c)		-40
(d*c)	Total vegetable cost (TV)		-800
	Charge/delivery (cd)		100
(d*cd)	Total charge (TC)		2000
(TC-TV-I)	Cash flow	-3000	2800

PV of -3,000 at t = 0 remains -3,000

For calculating the PV of the cash flows for the 15 weeks:

I/YR = 5%/52 = 0.10%; N = 15; PMT = 2,800

Solve for PV, PV = 41,678.68 (Note: it will show with a negative sign. Ignore that.)

NPV = 41,678.68 - 3,000 = 38,678.68 (Answer)