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Part 2 Project (30%) This brief management REPORT should be 300 words in length and include embedded tables and graphs as needed (graphs will not be included in the word count). Your report should not only calculate clearly but discuss the implications and explain to management the best course of action. Hairly in the Morning A friend has the idea of setting up a mobile hairdressing business. After a brief discussion you ascertain the following details that enable you to put together your report. - At the beginning, the business will buy two vans costing 17,500 each (including the hairdressing equipment). - Before the business starts, 4,500 will be spent on advertising. - The plan is to look ahead for four years of operations with the vans sold for an estimated 1,450 each at the end of the fourth year. - Two staff will be employed, each costing a fixed 17,500 per year for each of the four years. - Other fixed costs will be 5,500 per year for the rent of the office base and 4,300 per year for other costs. - Variable costs (petrol and hair products etc) will be 11 per customer. The selling price will be 27.50 - The company will work 50 weeks a year, for 5 days a week. Each van is forecast to have 6 appointments in the first year per day (so, 12 in total for the two vans). In years, 2, 3 and 4, this is expected to rise to 8 appointments per day per van. - The assumed time value of money (discount rate) is 13% Your brief report should include: - An executive summary - A brief introduction - An explanation of the NPV and payback calculations and results along with appropriate table(s). - A sensitivity analysis of additional sales being 10% lower throughout the forecast period. What sales rise forecast error % would be necessary to change the viability of the project, using the NPV calculation? - A summary including a recommendation that draws on both qualitative as well as quantitative factors.

Part 2 Project (30%) This brief management REPORT should be 300 words in length and include embedded tables and graphs as needed (graphs will not be included in the word count). Your report should not only calculate clearly but discuss the implications and explain to management the best course of action. Hairly in the Morning A friend has the idea of setting up a mobile hairdressing business. After a brief discussion you ascertain the following details that enable you to put together your report. - At the beginning, the business will buy two vans costing 17,500 each (including the hairdressing equipment). - Before the business starts, 4,500 will be spent on advertising. - The plan is to look ahead for four years of operations with the vans sold for an estimated 1,450 each at the end of the fourth year. - Two staff will be employed, each costing a fixed 17,500 per year for each of the four years. - Other fixed costs will be 5,500 per year for the rent of the office base and 4,300 per year for other costs. - Variable costs (petrol and hair products etc) will be 11 per customer. The selling price will be 27.50 - The company will work 50 weeks a year, for 5 days a week. Each van is forecast to have 6 appointments in the first year per day (so, 12 in total for the two vans). In years, 2, 3 and 4, this is expected to rise to 8 appointments per day per van. - The assumed time value of money (discount rate) is 13% Your brief report should include: - An executive summary - A brief introduction - An explanation of the NPV and payback calculations and results along with appropriate table(s). - A sensitivity analysis of additional sales being 10% lower throughout the forecast period. What sales rise forecast error % would be necessary to change the viability of the project, using the NPV calculation? - A summary including a recommendation that draws on both qualitative as well as quantitative factors.