Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show in Excel with excel formula You secure a team whos wants to help you develop, source, test,and launch the product. You spend the

Please show in Excel with excel formula

You secure a team whos wants to help you develop, source, test,and launch the product. You spend the next 2 years getting to launch by spending $35,000 in your first year and $40,000 in year 2 prior to launch

Your fore casted sales:

Year 1(post launch): 50units

Year 2: 150

Year 3: 200

Year 4: 250

Year 5: 250

- Your price point is $700 direct to Consumer, Amazon takes 16% of the Gross sale as a fee leaving you with a Net Sale of $588 per unit.

- Your on-going cost to run the business starting in the launch year is the following:

i.Year 1: 35% of Net Revenue

ii.Year 2 through 5: 30% of Net Revenue

- What COGS, and therefore net profit %, (to the nearest 10th of a $ and %) do you need to make this a positive NPV at 8% Cost of Capital (interest rate)?

- Terminology: Gross Sales is not Net Sales. In this example: Gross Revenue is $700 per unit. Net Revenue is $588 which is the $ you receive after selling on Amazon.

Remember: Cash Flow is NOT Revenue.

All calculations are based on end-of-year principle.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Public Finance Theory And Practice

Authors: M. Marlow

1st Edition

0030969603, 978-0030969607

More Books

Students also viewed these Finance questions