QUESTION

Your branch is in the process of introducing a new sales campaign to support sales efforts of new deposit sales. Your branch operations manager has proposed the following as the key components of the campaign which is planned to run for 3 months.

As a result of the campaign,6800 current accounts will be sold with average funding rate of 50% and an average ticket size on funded accounts of ZMW500 per account. The campaign is also anticipated to deliver new sales of 1500 savings accounts na dwith an average funding will be sold in the first month while the balance will be sold equally in each of the subsequent two months of the campaign period.

Current accounts attract ledger fees of k25 per account while savings while savings accounts attract ledger fees of k40 per account.

FTP credits are awarded at a rate of 16%p.a for a local currency deposits wile a rate of 26% p.a for local currency savings deposits.

Staff that successfully engage in the sales campaign will be paid 2% of the total deposit values which they bring in, and the branch will bear the tax on their earnings over the campaign period. The stuff incentives will be paid in each of the months when the new business is brought in.

The marketing department has agreed with the branch manager to print tent cards and danglers costing ZMW40,000, and this expense will be incurred in month one.

REQUIRED

Put up a financial business case for the proposed sales campaign and recommend whether the campaign should be undertaken or not purely on financial grounds.