Finally
After another day at school, only 4 hours (YAY), I'm home at my apartment.
I will tell a little about what we did today
Economics
So the semester test is soon coming up, and today we practiced for that by doing a simulair task.
So below i have pasted my notes from todays school. Feel free to use guys! [PLEASE NOTE I HAVE TRASNLATED BY GOOGLE, FROM DK TO UK, SO SOME FINANSIAL FUNCTIONS IN EXCEL MAY NOT WORK FOR YOU]
Assignment to investment theory
The company wants to evaluate the beneficial importance of following investment opportunity:
question 1
Rate the investment attractiveness of the use of capital value method .
Reply
In this method, a fundamental principle I.
1 An investment calculation consists of deposits and withdrawals rows.
2 Amounts falling at different times , are not directly comparable , but must be done ensbenævnte MHT time , using interest expense.
These particularities are taken into account in investment theory's fundamental principle I, which reads:
" An investment is advantageous if the present value of all its payments is greater than or equal to zero ", ie . if :
Capital value method :
How NBT 's net payments in time t and n is the life of the investment while in the kalkulationsrentefoden . Kalkulationsrentefoden represent in summary form the financing side , since we are based on the assumption that the capital market is perfect.
The investment NPV is also called its capital value , and this is generally referred to K0 , the subscript symbolizes that all payments are assigned to time zero . If this symbolism I have is that an investment is beneficial, provided
if it is> 0 is inverstringen profitable
K0 = 2875588 , DKK 25
This investment is advantageous because K0 0
question 2
Rate the investment attractiveness of the use of the annuity .
Reply
Annuity method is a variant of the capital value method .
K0 0
Is one's significant that the corresponding annuity
This illustrates that an investment is profitable if its average net payments per . forward is greater than or equal to zero.
= 660,255.19 AUD
The average net farm payment . forward is greater than 0 , so the investment is beneficial.
question 3
Rate the investment attractiveness of the use of the internal interest rate method .
Reply
An investment internal rate of return for which the present value of the payments equals the present value of the payments , ie . the interest rate for which the net present value is zero :
= Nb0 + NB1 (1 + R) -1 + ...... + NBn (1 + R) n = 0
In this expression, NBT net payment in time (t), and (R) is the investment's internal rate of return . The internal rate of return can often be found by experiment.
An investment can have multiple internal clean feet, that in principle is to solve a nth degree equation. Such an equation can have as many positive real roots, which is the sign variations in the equation. In most cases , however, one and only one internal rate of return . This applies when the following two conditions are both met:
1 The payment comes before payments
2 The sum of the deposit is greater than the sum of payments .
K0 = -10-1 (1 + R) -1 +4 ( 1 + R ) -2 +4 ( 1 + R ) -3 +4 ( 1 + R) -4 +4 ( 1 + R) -5 + 4 (1 + R) -6 = 17.25 per cent .
If the investor nonrepresentational is less than 17.25 per cent . is the above-mentioned advantageous investment . It enables more than the minimum return an investor requires .
The investment is advantageous in that the IRR is greater than the discount rate .
The internal rate of return comparable with discount :
The discount rate < Internal rate = investment is profitable
Excel : IA of all net amounts in the years
question 4
Rate the investment attractiveness of the application of the repayment method - static as well as dynamic .
Reply
This method compares the recovery time with the investor already fixed maximum individualistic . The recovery time (p) is the number of periods the items in the amount of investment in time zero is recouped. This vindictiveness can be calculated as a simple accumulation or taking into account interest rates.
The static method of reimbursement - without interest adjustment
If the annual net payments represent an uneven number of payment determined repayment period usually by graphical or linear interpolation.
The method of repayment does not correspond to the fundamental principle 1,
1 not take into account the interest rates
2 not take into account payments that fall beyond recovery period
3 choice of maximum misunderstanding is subjective. Nevertheless , the method is widely used.
It is advantageous because the payback time is only 3 to 4 years. Indeed, we have 6 years. For refund.
The dynamic method - with interest adjustment
A good variant is to calculate the number of years it takes before the present value of payments to cover the investment cost in time zero . The method thus becomes a calculation of the critical value for the life of the project (s)
Recovery time is now no longer what is also seen , but it is still advantageous.
question 5
Are the three methods equally good as a basis for decision execution of the investment ?
Reply
About one in a given situation should use capital value method or annuity is partly a matter of what gives the simplest calculations , and partly a question of whether the outcome is desired given as a present value (with dimension million) or as an annuity (with dimension kr . / yr . ) . Many seem to prefer average on an annual basis rather than capital values.
As the formula shows , the average net payments is always calculated based on value . But , for example . deposit since an annuity , you can benefit from the following:
average deposits
- Average payouts
= Average net payments
Annuity method can be used when there appears one or more annuities in an investment payline . Such a thing will often be the case when plants calculations presented in constant prices.
The basic idea of the internal interest rate method , is that the investor will know the return on invested capital , while it is tied up in investment. But the size of the internal rate says nothing at all about how long the returns achieved . It tells nothing about those involved in amount absolutes .
Investors do not need to know its kalkulationsrentefod exact , but only to know whether it is larger or smaller than R. The internal rate of return gives it the character of a critical value for kalkulationsrentefodens size. The internal rate of return can be interpreted as the average rate of the average amount invested.
The basic idea of the internal interest rate method , is that the investor will know the return on invested capital , while it is tied up in investment. But the size of the internal rate says nothing at all about how long this return is achieved . It tells nothing about those involved in amount absolutes .
Investors do not need to know its kalkulationsrentefod exact , but only to know whether it is more or less a (R). The internal rate of return gives it the character of a critical value for kalkulationsrentefodens size.
The internal rate of return can be interpreted as the average rate of the average amount invested
Correlation between recovery approach and the internal interest rate method can be illustrated by the following example .
Year 0 Year 1 Year 2 Year 3 Year 4
100,000 30,000 30,000 30,000 30,000
The investment shown above is characterized by the payment in time zero followed by a number equal net payments . For this type of investment can be a fairly close correlation between the recovery approach and the internal interest rate method . The criticism of the repayment method framework therefore also to some extent internal interest rate method .
The final answer to this question must be yes .
Is there a task talk about promotional cost = market contribution
Is there no = coverage Contributions
If both annual gross margin and promotional expenses = profit of....
Thats it for now, thanks for tuning in! :D
//Educating Gamer
