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NPV
 
Hi, I am setting up my own business and wants to know which option to go for in investment, mainly for decision making purposes.

You are considering the purchase of a motorised caravan.
The company offer 2 means of purchase:

Payment of the full purchase price of £75000 plus a recommended service agreement and extended guarantee costing £700 per year or an initial deposit of 20% of the purchase price plus 8 annual payments of £8700 plus a finance arrangement fee of 3% of the purchase price.
Assuming that the cost of capital is 10% use the NPV method to evaluate which option represents the most economic choice.
 
net present value is only one yard stick for checking value of investment, try other ones
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