CASE STUDY

cost $ 32,750.00 year CF

cf $ 4,500.00 0 $ -32,750.00
cost of c 10% 1 $ 4,500.00
2 $ 4,500.00
3 $ 4,500.00
4 $ 4,500.00
5 $ 4,500.00
6 $ 4,500.00
7 $ 4,500.00
8 $ 4,500.00
9 $ 4,500.00
10 $ 4,500.00

A) B)
Pay back 7.27777777777778 YEAR COST
NPV $ -5,099.45 CF
IRR 6% COST OF C

in this case we are going to reject In this case we will accept

C)

COST $ 32,750.00 PAYBACK $ 7.73

CF $ 3,825.00 NPV $ 21,892.86
COST OF C 10% IRR 15%
GROWTH 3%
PERPETUITY
in this case we will accept

D)

PROJECT YEAR 0 YEAR 1 YEAR 2 YEAR 3

OPEN NEW WINDOW $ -100,000.00 $ 35,000.00 $ 35,000.00 $ 35,000.00
RENOVATION OF THE EQU $ -60,000.00 $ 20,000.00 $ 20,000.00 $ 20,000.00
BUILD A NEW SPACE $ -160,000.00 $ 60,000.00 $ 60,000.00 $ 60,000.00

COST OF CAPITAL 12%

INVESTMENT YEAR 1 YEAR 2 YEAR 3 YEAR 4

$ -1,000,000.00 $ 250,000.00 $ 250,000.00 $ 250,000.00 $ 250,000.00

COST OF CAPITAL 10%

PAYBACK 4.00 years
NPV $ -954,545.45
IRR 7.93%

ARR 10.00%

EJERCICIO 1
A)
NPV $ -50,000.00

INVESTMENT YEAR 1 YEAR 2 YEAR 3 YEAR 4

$ -1,000,000.00 $ 250,000.00 $ 250,000.00 $ 250,000.00 $ 250,000.00

B) INVESTMENT YEAR 1 YEAR 2 YEAR 3

$ -897,696.69 $ 250,000.00 $ 250,000.00 $ 250,000.00

NPV(VNA) $ 50,000.00 subsidy

IRR 12%

Subsidy
PAYBACK 3 3 years

INVESTMENT YEAR 1 YEAR 2 YEAR 3 YEAR 4

$ -897,696.69 $ 250,000.00 $ 250,000.00 $ 250,000.00 $ 250,000.00

ARR 20%
 $ 32,750.00 PAY BACK $ 7.99
$ 4,100.00 NPV $ 8,250.00
10% IRR 13%
PERPETUITY
case we will accept year CF ACC FC
0 $ -32,750.00 $ -32,750.00
1 $ 3,825.00 $ -28,925.00
2 $ 3,939.75 $ -24,985.25
years 3 $ 4,057.94 $ -20,927.31
4 $ 4,179.68 $ -16,747.63
5 $ 4,305.07 $ -12,442.56
6 $ 4,434.22 $ -8,008.33
7 $ 4,567.25 $ -3,441.08
8 $ 4,704.27 $ 1,263.19
9 $ 4,845.40 $ 6,108.58
10 $ 4,990.76 $ 11,099.34

YEAR 4 NPV IRR

$ 35,000.00 $ 630,723.00 15%
$ 20,000.00 $ 746.99 13%
$ 60,000.00 $ 22,240.96 18%

YEAR 5
$ 250,000.00
YEAR 5
$ 250,000.00

YEAR 4 YEAR 5
$ 250,000.00 $ 250,000.00

$ 102,303.31

YEAR 5
$ 250,000.00
$15,511.53
$20,682.04
5,170.51 €

24

8.57 €