Question: You are told that using a 15% discount rate the NPV of each of the four models is estimated to be: San Remo La Spaziale

  1. You are told that using a 15% discount rate the NPV of each of the four models is estimated to be:

San Remo

La Spaziale

Expobar

Astoria

NPV (r=15%)

-£503-£136-£339-£614

Use this information to calculate the internal rate of return (IRR) of the four models. Show your workings.

(6 marks)

  1. Using the findings above (MCA, NPV and IRR) provide a short report for Mary with your advice on which Espresso model she should choose. Identify the advantages and disadvantages of the three techniques.

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