1990-10-22 Regular Meeting - Laserfiche WebLink

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• ~ RECEIVED ~~ -/~ ~9~ COMM. DEV. CITY OF LA PORTE INTER-OFFICE MEMORANDUM T0: Alex Osmond, Golf Professional FROM: Jeff Litchfield, Director of Finance DATE: October 10, 1990 SUBJECT: Bids for Golf Cars I have reviewed the Golf Car Bids from a financing viewpoint. In order to determine the payment option that is best for the City, it is necessary to determine the present value of the various options. The present value is the measuring stick in this instance because we want to determine how much the financing is costing us as compared to our earnings on the money we will be able to keep until a later payment date. The present value amounts, at eight percent interest, for the three options are listed below. Present Value Option Payment Date Cash Payment of payment 1 11/01/90 93,042.00 93,042.00 2 11/01/90 27,860.00 27,860.00 5/01/92 74,536.92 66,134.64 Total 102,396.92 93,994.64 3 11/01/90 0 0 5/01/91 15,664.90 15,052.66 11/01/91 44,042.45 40,667.10 5/01/92 44,042.45 39,077.70 Total 103,749.80 94,797.46 As you can see, the present value payment for option 1 is the most cost effective, however, it requires a total cash outlay of $93,042.00. Because we want to extend payment of the cars over the life of the cars (matching principal), option 2 is the most beneficial of the other two options. I recommend the cars be paid for under a financing plan similar to option 2. It will require a cash payment of $27,860 this fiscal year and a payment of $74,536.92 next fiscal year. If I can be of any further help, please let me know.