Assume that after further research and examination, marketing contributed only 50% to new sales in UK, Bulgaria, and Poland, but 100% to new sales in Romania. Your supervisor has asked you to formulate a decision as to whether the company should continue the marketing campaigns.

Please explain how IRR, NPV, and payback were calculated.

Sports Sponsorship ROMI analysis F1 Impact factor 100% Estimate of contribution of marketing to new sales Year 0 Year 1 Year 2 Year 3 Sponsorship Related Sales EA 500,000 $ 750,000 $ 1,000,000 Romania Campaign $ 2,500,000 2,500,000 $ 2,500,000 UK Campaign 2,500,000 $ 2,500,000 Bulgaria Campaign EA 2,500,000 $ 2,500,000 Poland Campaign 2,500,000 $ 2,500,000 Total revenues $ 2,500,000 $ 10,000,000 $ 10,000,000 COGS $ (1,750,000) $ (7,000,000) $ (7,000,000) Net Profit $ 750,000 $ 3,000,000 $ 3,000,000 Sponsorship cost $ (250,000) $ (850,000) $ (850,000) $ (850,000) Marketing activation cost $ (250,000) $ (600,000) $ (750,000) Total Costs $ (250,000) $ (1,100,000) $ (1,450,000) $ (1,600,000) EBIT $ (250,000) $ (350,000) $ 1,550,000 $ 1,400,000 Tax $ 96,250 $ 134,750 $ (596,750) $ (539,000) Net Profit (or loss) After Tax $ (153,750) $ (215,250) $ 953,250 $ 861,000 IRR 132% NPV $916,813 Payback (years) 1.4 $ (369,000) $ 584,250 0.387096774