2016-17 First Sit version S.docx

Exams
Uploaded by Nicolas Daive 0 at 2018-05-15
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how you do this?
how do you do this
Compounding formula = Investment * (1+ (r/n))^(n*t) n = number of compounding per year n = 1 if annual compounding n = 2 if semi-annual compounding n = 365 if daily compounding etc Continous compounding = Investment * e^(r*t) So we have, for invesment i = 28,051 for investment ii = 28,211 for investment iii = 28,381
how do you calculate this question
You do the NPV for each alternative and then take the highest, so you know that for i it will be 350,000€ because he is only selling the restaurant. For ii you do -50,000 +100,000/(1.07) + 350,000= 393,457.94 and for III you do -40,000 + 75,000/(1.07) + 350,000= 380,093.46. So at the end you know that the highest NPV is ii followed by iii and then i. Hope you get it!