Financial: price discount and cost escalation

Dear expert,

Any suggestion on how to illustrate a:
- price discount say 1% per year for the next 5 years.
- a cost escalation of 2,5% per years for the next 5 years.

Price discount:
Base price 100 USD
Year 1 99 USD
Year 2 98,01 USD
Year 3 97,029 USD
Year 4 96,058 USD
Year 5 95,098

Br,
Juan
easycapitalAsked:
Who is Participating?
I wear a lot of hats...

"The solutions and answers provided on Experts Exchange have been extremely helpful to me over the last few years. I wear a lot of hats - Developer, Database Administrator, Help Desk, etc., so I know a lot of things but not a lot about one thing. Experts Exchange gives me answers from people who do know a lot about one thing, in a easy to use platform." -Todd S.

Thibault St john Cholmondeley-ffeatherstonehaugh the 2ndCommented:
It's not very clear what you are asking.
You have demonstrated the 1% reduction over 5 years. You could do the same with the 2.5% increase?
Or you could combine the increase and the reduction and show the final effect on the values?
If this is describing a real world situation a little more detail would help get an answer.
0
easycapitalAuthor Commented:
Dear expert,

Looking for an effective way to show a price volume discount through the years and as part of this I would like to show that this price is taking into account the cost increase.

Br
JP
0
nickg5Commented:
Are you referring to the price you are having to pay for the items that you are selling?
Example the items you are buying go up in price 2.5% each but you wish to give a 1% discount to your buyers?

The 1% drop in price over 5 years leaves it as $95.098.
Instead of fooling with pennies just give a $1 discount each year. The end result after 5 years would be $95.00 even and that should not break the bank.

If prices are going up 2.5% then:
$100 = $102.50
$102.50 = $105.0625
$105.0625 = $107.689
$107.689 = $110.381
$110.381 = $113.14

There are easier mathematical ways to do price increases and price drops than 1% and 2.5%. They work fine the first year but not after.

What are the items you are buying and selling? If the margins are that tight (up 1.5% each year) then you may have other issues.
0
Ultimate Tool Kit for Technology Solution Provider

Broken down into practical pointers and step-by-step instructions, the IT Service Excellence Tool Kit delivers expert advice for technology solution providers. Get your free copy now.

ProfessorJimJamCommented:
Please see attached example in Excel.

Price of $100 duration of 5 years with a 2.5% escalation factor and discount rate of 1% is equivalent to a flat rate of $105.07


 2015-06-29-12-31-37-Microsoft-Excel---BoBook1.xlsx
0

Experts Exchange Solution brought to you by

Your issues matter to us.

Facing a tech roadblock? Get the help and guidance you need from experienced professionals who care. Ask your question anytime, anywhere, with no hassle.

Start your 7-day free trial
easycapitalAuthor Commented:
Dear Experts,

The mathematics are great. I am looking for a way to illustrate in a convincing way the above info.

Br
Juan
0
Martin LissOlder than dirtCommented:
This question has been classified as abandoned and is closed as part of the Cleanup Program. See the recommendation for more details.
0
It's more than this solution.Get answers and train to solve all your tech problems - anytime, anywhere.Try it for free Edge Out The Competitionfor your dream job with proven skills and certifications.Get started today Stand Outas the employee with proven skills.Start learning today for free Move Your Career Forwardwith certification training in the latest technologies.Start your trial today
Microsoft Excel

From novice to tech pro — start learning today.

Question has a verified solution.

Are you are experiencing a similar issue? Get a personalized answer when you ask a related question.

Have a better answer? Share it in a comment.