=+These sales will be made on three months' credit and there will be no bad debts.

There are only three cost elements. First, wages amounting to £6m p.a. Second, raw materials costing one-half of sales for the year. Raw material suppliers grant three months of credit. Third, direct overhead (only incurred if the project is undertaken) at

£5m per year. Start date: 1.1.20X1.