{"id":1260,"date":"2021-05-19T13:28:54","date_gmt":"2021-05-19T17:28:54","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/?post_type=chapter&p=1260"},"modified":"2021-06-30T10:02:44","modified_gmt":"2021-06-30T14:02:44","slug":"videos-investment-decisions","status":"web-only","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/chapter\/videos-investment-decisions\/","title":{"raw":"Videos: Investment Decisions","rendered":"Videos: Investment Decisions"},"content":{"raw":"
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  1. You are considering investing in a business. The business will cost $60,000 and require another $10,000 in immediate renovations.\u00a0 The business is expected to return $20,000 per year for 4 years.\u00a0 The company requires a 10% rate of return.<\/li>\r\n<\/ol>\r\n

    (a) Calculate the payback for the business<\/p>\r\n[embed]https:\/\/youtu.be\/YXZWqThJi4E[\/embed]\r\n

    (b) Calculate the NPV for the Business<\/p>\r\n

    (c) Calculate the Internal rate of return<\/p>\r\n[embed]https:\/\/youtu.be\/2iU9PqPOtAs[\/embed]\r\n

    Using The BAII Plus for Cash Flows<\/h2>\r\n[embed]https:\/\/youtu.be\/RIe4LpSGja8[\/embed]\r\n
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    1. You are considering investing in a business. The business is expected to cost $60,000 and require another $10,000 in immediate renovations.\u00a0 The business is expected to return $20,000 per year for 4 years and then $40,000 after the fifth year.\u00a0 The company requires a 10% rate of return.<\/li>\r\n<\/ol>\r\n

      (a) Calculate the payback for the business<\/p>\r\n

      (b) Calculate the NPV for the business<\/p>\r\n

      (c) Calculate the Internal rate of return<\/p>\r\n[embed]https:\/\/youtu.be\/eqqeEYQvMwk[\/embed]\r\n\r\n \r\n

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      1. A company is considering launching a new product. The initial start-up costs will be $100,000 and the product will provide returns of $40,000 in year 1, $40,000 in year 2 and $31,757.60 in the third year.<\/li>\r\n<\/ol>\r\n

        (a) Calculate the NPV using a MARR of 5%<\/p>\r\n

        (b) Calculate the NPV using a MARR of 7%<\/p>\r\n

        (c) Calculate the NPV using a MARR of 6%<\/p>\r\n

        (d) Calculate the IRR of the project.<\/p>\r\n[embed]https:\/\/youtu.be\/oIpxU_12KWU[\/embed]\r\n

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        1. You are considering an investment in a gardening business. You estimate your start-up costs to be $160,301.96.\u00a0 You expect rent and electricity charges to be $15,000 per year payable at the beginning of the year for 7 years.\u00a0 You expect revenue to be $50,000 per year for 7 years at which time you will sell your equipment for $15,000.\u00a0 Your MARR is 12%.<\/li>\r\n<\/ol>\r\nhttps:\/\/youtu.be\/L3pwJT5rHzU\r\n

          (a) Calculate the NPV for the business \u2013 should you invest?<\/p>\r\n

          (b) What is the IRR?<\/p>\r\n[embed]https:\/\/youtu.be\/cj7nkhUNGlY[\/embed]\r\n

          (c) By switching to solar panels you can save some money on the start-up. How much per year would you need to save to make this a worthwhile investment?<\/p>\r\n[embed]https:\/\/youtu.be\/KzFJDku-KJ0[\/embed]\r\n

          (d) The makers of your equipment are offering a rebate at the end of the first year. How large would that rebate need to be in order for you to accept this investment?<\/p>\r\n

          (e) The salesperson says that you have underestimated the equipment\u2019s salvage value. What salvage value would make this an acceptable investment?<\/p>\r\n[embed]https:\/\/youtu.be\/c68MST8PXao[\/embed]\r\n

          Summary<\/h2>\r\n[embed]https:\/\/youtu.be\/pG-H21x13kg[\/embed]","rendered":"
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          1. You are considering investing in a business. The business will cost $60,000 and require another $10,000 in immediate renovations.\u00a0 The business is expected to return $20,000 per year for 4 years.\u00a0 The company requires a 10% rate of return.<\/li>\n<\/ol>\n

            (a) Calculate the payback for the business<\/p>\n