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A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost (Product A) Revenue/cost
A company is thinking of investing in one of two potential new products for sale. The projections are as follows: Year Revenue/cost (Product A) Revenue/cost (Product B) a) Calculate the payback period for both products in years and months (2 marks) b) Calculate NPV of both products assuming a discount rate of 9% (6 marks) c) Which product should be chosen and why? (2 marks) d) Calculate the IRR for Product A only using 1% and 20% to 1d.p. (4 marks) e) Outline the advantages and disadvantages of the NPV and IRR including the citing of sources. (6 marks) Apply mathematical skills around cost structures and appropriate equations to answer the following, inclusive of all asaociated workings to maximise marks: Opening Inventory + Purchases - Closing Inventory = Cost of Sales (CoS) Mark up cogt structure example with example of Margin cost atructure a) A fire on 31st October destroyed some of a company's inventory and its invantory rerords The following information is available: Based on this information, what is the value of the inventory lost? (3 marks) b) What are the definitions and business uses of calculating mark-up and margin? Please use Harvard when citing any sources. (4 marks) c) Calculate mark-up (in percentage to 2 decimal places) (1 mark) d) Calculate the margin as a % to 1 decimal places (1 mark) e) What is the operating profit margin percentage if the admin cost is reduced by 50% ? Show this to 2 decimal place (2 marks) f) Define the following and provide respective examples with numeric calculations where possible. Please use academic sources: Trade discount ( 1 mark for definition and 1 for example) Simple interest ( 1 mark for definition and 1 for example) Compound interest ( 1 mark for definition and 1 for example) (6 marks)
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