Net Present Value

Net Present Value From a Personal View
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Net Present Value (NPV) is an intrinsic valuation method that relies on the future cash flows of an investment to determine its viability. Normally, projects with negative NPV values are declined while the positive NPV values are endorsed in their order of increment (Gallo, 2014). All the future cash flows are discounted to the present period to determine their present values. Although a personal decision does require a future projected cash flow, the decision made should at least leave a positive balance between the current and the expected position.
Three years ago, I was faced with a difficult decision to make concerning whether to continue using my old vehicle or to buy a new one. The older car, Subaru, was eleven years old. It operated on the manual system and called for almost weekly services which were costly as the Subaru spare parts are rare in the country. In the short-run, however, the costs seemed insignificant relative to the costs of obtaining a new car. The situation was further worsened by the total failure of the car twice per week owing to the changes in the weather.
The car started having problems in starting and gearing complicating the issue even further and expending more money on it. I decided to dispose it at $600 and purchase a new one at $3,600. The weekly expense of $300 was reduced to a monthly expense of $100. Yearly, I saved $ (300*52) = $15,600 from the weekly expenditure of car repairs.

However, rom this, I still used $100*12 for the monthly repair for the new car which translates to $1,200. Deducted from the savings, it becomes $12,000. Further to be deducted from the savings is the cost of acquiring a new vehicle: 12,000-3,600= $8,400. For this, the disposal value should be added: 8,400+600= $ 9,000. Purchasing the new car saved me $9,000 from not proceeding with the old car.
Reference
Gallo, A. (2014). A Refresher on Net Present Value. Harvard Business Review, retrieved from https://hbr.org/2014/11/a-refresher-on-net-present-value