Grantham University BA470 Entrepreneurship Week 5 Exercises in Excel

Apr 14th, 2015
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Grantham University BA470 Entrepreneurship Week 5 Exercises in Excel

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4.2Opportunity cost rate refers to the return on an investment that is going to be sacrificed in order to invest on another investment and both the investment have the same risk associated with it. This is used to check whether any new investment is increasing the value of our investment or not. Discounted cash flows are based on the rule that a dollar is worth more than it's worth tomorrow. Opportunity cost rates help estimating the value of the dollar in the future and analysis could be done. No there are many alternate numbers that can be used to evaluate other potential investments. 4.4The annual growth would be less than 10 percent. This is because if the company had grown at the rate of 10 percent per year the growth would have been much more than 100 percent over ten years. The sum of second year would sum invested in the first year plus the interest of the preceding year. And following this rule if the annual growth would have been 10 percent the growth would have been much more than 100 percent.4.5We would prefer a savings account that pays 5 percent interest compounded daily over the one that is compounded semi annually. The reason being that each day we will have a new sum for the account that is compounded daily while there will be a new sum every six months. When calculated the net interest for the one compounded semi annually is 5.06 percent while for the one compounded annually it is 5.13 percent. 4.3Sum at the start is $250000 and we need $ 1 million

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