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A new product development project requires 3,000k of investment over three years. Following launch of the product in year four, the company forecasts the following
A new product development project requires 3,000k of investment over three years. Following launch of the product in year four, the company forecasts the following five- year sales figures in product units sold: Y1=2000, Y2=3500, Y3=4700, Y4=5600, Y5=6800. Each unit is sold for 2,000 with a cost of 1,500 per unit. Apply both the Simple Payback Method and Discounted Cash Flow method to calculate when the company will recover the initial investment and compare the two. The discount rate net of inflation is 20%. What are the main considerations when using these methods? A new product development project requires 3,000k of investment over three years. Following launch of the product in year four, the company forecasts the following five- year sales figures in product units sold: Y1=2000, Y2=3500, Y3=4700, Y4=5600, Y5=6800. Each unit is sold for 2,000 with a cost of 1,500 per unit. Apply both the Simple Payback Method and Discounted Cash Flow method to calculate when the company will recover the initial investment and compare the two. The discount rate net of inflation is 20%. What are the main considerations when using these methods
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