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June 28, 2025, 08:13:45 am
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Author Topic: Finance 1 Question  (Read 1067 times)  Share 

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golden

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Finance 1 Question
« on: April 12, 2012, 10:57:13 am »
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You anticipate that during your time at university you will be drinking a lot of coffee and you want to buy a coffee machine. You consider two options. The first option is a DeLonghi Lattissima Premium that uses Nespresso capsules.
Your other option is a Saeco Syntia. You expect to drink four espressi per day on average over the next three years, and you expect the machines to last three years.
Compute the costs, in today’s terms, of the two coffee machines (that is, the purchase price of the machines and the cost of coffee). Which machine would you buy? State all your assumptions and show all your computations. Why do you think this is an exercise in a finance subject?

I'm not sure how to start, and I don't have the solutions, could someone hint me at what to do?

Oh and this question IS NOT part of an assignment or anything.
« Last Edit: April 12, 2012, 11:01:55 am by golden »
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Tashi

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Re: Finance 1 Question
« Reply #1 on: April 13, 2012, 03:36:45 am »
+1
Wasn't this from one of the early tutes? I wouldn't bother doing it, it was just to show the application of annuities. We went through it in the tute but its based on a lot of assumptions so everyone would get a different answer.
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golden

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Re: Finance 1 Question
« Reply #2 on: April 13, 2012, 09:21:43 am »
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Quote from: Tashi on April 13, 2012, 03:36:45 am
Wasn't this from one of the early tutes? I wouldn't bother doing it, it was just to show the application of annuities. We went through it in the tute but its based on a lot of assumptions so everyone would get a different answer.

Yes it was, but I haven't been to any and would like to know what possibilities there would be in the discussion.
I mean with annuities, how would you assume things? Would you say that you buy packs of 50 so the annuity is per 50 or would you assume that you somehow purchase 1 at a time?
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2014: Microbiology/Immunology Major.

Thanks to (alphabetical order):
2010: appianway. 2011: Kamil9876, laseredd, xZero. 2012: dc302, harper, marr.
Multiple times: pi, Russ, stonecold, TT.

Tashi

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Re: Finance 1 Question
« Reply #3 on: April 13, 2012, 09:57:47 pm »
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Quote from: golden on April 13, 2012, 09:21:43 am
Quote from: Tashi on April 13, 2012, 03:36:45 am
Wasn't this from one of the early tutes? I wouldn't bother doing it, it was just to show the application of annuities. We went through it in the tute but its based on a lot of assumptions so everyone would get a different answer.

Yes it was, but I haven't been to any and would like to know what possibilities there would be in the discussion.
I mean with annuities, how would you assume things? Would you say that you buy packs of 50 so the annuity is per 50 or would you assume that you somehow purchase 1 at a time?

You have to assume how much the pods cost, the machine costs, how many you drink a day etc. etc. It's a stupid question
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Elnino_Gerrard

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Re: Finance 1 Question
« Reply #4 on: April 24, 2012, 10:55:28 pm »
+1
I remmeber this question last year. Tutor said it was a shit question..and skipped  :P
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