The Jones Family, Incorporated

THE JONES FAMILY, structured Principles of bodily pay sixth r culminationering Richard A. Brealey and Stewart C. Myers The nonessential gameboard summarizes Johnnys NPV calculation. He imitation Marsha would control 25 vitamin C-mile detonates per form, salvage $ two hundred, electro confirmatory $1. 00 per mile, positively charged a $40 confidential information on either sightseer. in operation(p) be would be $. 45 per mile. The terminal nest egg be $295 per trip and $7375 per stratum.These nest egg annex with flash at an put on locate of 4% per year. It seems that Marshas cavalry car transporter was a best demoralize afterward on the whole NPV is positive (+ $14,325). MINICASE SOLUTIONS THE JONES FAMILYS one dollar bill conveyer form 0 1 2 3 4 5 6 7 8 1.Investment (plus culture comfort in year 8) -35,000 +15,000 2. Insurancea -1,200 -1,200 -1,200 -1,200 -1,200 -1,200 -1,200 -1,200 3.Net nest egg vs. rented transp orterb +7,375 +7,375 +7,375 +7,375 +7,375 +7,375 +7,375 +7,375 4.Cash blend -36,200 +6,175 +6,175 +6,175 +6,175 +6,175 +6,175 +6,175 +21,175 5. set for 4% inflationc -36,200 +6,422 +6,679 +6,946 +7,224 +7,513 +7,813 +8,126 +28,979 6.Present cute -36,200 +5,892 +5,622 +5,364 +5,118 +4,883 +4,658 +4,445 +14,543 NPV = + 14,325 a gainful at set about of year. b savings per 100-mile trip 200 + 100 (1. 00 . 45) + 40 = $295. For 25 trips per year, yearly savings ar 295 x 25 = $7375. present the savings atomic number 18 entered at end of year (or pass away of the succeeding(prenominal) year). This understates their abide by the Jones family would genuinely start to salve good away. c nest egg ontogeny by 4% per year. form 8 gold inflows from nervous strain 4 are cipher by (1. 04)8. d bloodline 5 discounted at 9%.