Calculation of the PFI Credit

Year

1

2

3

4

5

Total

Capital costs of preferred option

£5,000,000

£5,125,000

£5,253,125

£5,384,453

£5,519,064

£26,281,643

Capital costs of "do minimum"

£200,000

£205,000

£210,125

£215,378

£220,763

£1,051,266

Difference

£4,800,000

£4,920,000

£5,043,000

£5,169,075

£5,298,302

£25,230,377

Net present value of difference

£22,223,497

NPV Calculation

1.0000

0.9381

0.8800

0.8255

0.7744

£4,800,000

£4,615,385

£4,437,870

£4,267,183

£4,103,060

£22,223,497

Interest Rate

6.60%

Inflation Factor

2.50%