Calculation of number of wine bottles in Year 5

This is how the cash flow should look like:

This is the cash flow per year. Each bullet number is the year and between parenthesis the accumulated cash flow

1. -13,5k -13,2k (-26,7k)
2. -13,2k (-39,9k)
3. -13,2k (-53,1k)
4. -13,2k (-66,3k)
5. -13,2k (-79,5k)
6. -13,2k +30k +18k (-44,7k)
7. -13,2k +18k (-39,9k)
8. -13,2k +18k (-35,1k)
9. -13,2k +18k (-30,3k)
10. -13,2k +18k (-25,5k)
11. -13,2k +18k (-20,7k)
12. -13,2k +18k (-15,9k)
13. -13,2k +18k (-11,1k)
14. -13,2k +18k (-6,3k)
15. -13,2k +18k (-1,5k)
16. -13,2k +18k (3,3k) → Break Even.

Hi there,

As the case states, you are selling the 120 initial investment in year 5!

Hi there,

I would be happy to share my thoughts on it:

• It seems like in the case study, the initial investment is considered to be made in year 0, and as a result, the sale of 120 bottles takes place after 5 years, i.e., in year 5.

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Best,

Hagen

Hello,

I think the case treats the initial investment as “Year 0”, and the time accounting only starts after you start drinking and buying new wine.

This is why the case says “Thus at the end of year one, I should have 120+72=192 bottles in the investment section or 242 bottles in the total cellar”

Hope this clarifies!