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NuSkin expects the new men's line to be a success. It plans to introduce products one at a time and is projecting the following
NuSkin expects the new men's line to be a success. It plans to introduce products one at a time and is projecting the following sales volumes over the first five years: Year 1 Year 2 Year 3 Year 4 Year 5 Lip balm Eye cream Skin cream 18,000 5,000 21,000 7,000 4,000 25,000 10,000 5,000 12,000 16,000 The lip balm will sell for $18, the eye cream for $20, and the skin cream for $25. The costs of goods sold for the lip, eye, and skin products are $5, $6, and $7, respectively. In addition to the social media influencer costs, NuSkin will incur about $15,000 for market research in the first year. It also plans to hire, in a permanent position, a men's branding expert at a rate of $60,000 per year. The CEO would like you to calculate the NPV of the new product line over a five-year period, assuming the facility expansion and new machinery cash flows are non-differential to launching the men's line. Ignore your answer in Issue #1 and #2. Use 11.87% as the discount rate. As well, you need to prepare a qualitative assessment of NuSkin's strategic plan for introducing the men's line. In addition, make a recommendation on how NuSkin should proceed and suggest solutions for any implementation issues identified.
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