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XZZ Ltd . is considering purchasing the brand ( Doing - well ) . The management engaged your services to determine the viability of the
XZZ Ltd is considering purchasing the brand Doingwell The management engaged your services to determine the viability of the project. Extensive research on your part has revealed the following:
Expected sales units will start at in year and increase each year over the previous one by the percentages in the table :
Yr ; Yr ;Yr ; Yr ;Yr
Sales units est. ; ; ; ;
Price per unit: $ in year then it increases by $ in year this new price will increase by in year
Unit cost: $ in year then in year due to the accumulated effects of inflation should increase by the new price will increase by in year and remain constant in year
Cost of capital:
The Present Value Interest Factors PVIF based on a cost of capital are:
Yr ; Yr ; Yr ; Yr ; Yr
PVIF : ; ; ; ;
The following costs will also be incurred when the product is introduced:
Yr ; Yr ; Yr ; Yr ; Yr
Depreciation: ; ; ; ;
Overheads: ; ; ; ;
Other: ; ; ; ;
The Marketing will start at $ in year and due to inflationary pressure increase by annually.
The company capital charge: from year the acceptable capital charge will be
Role of Branding Index:
After year earnings are expected to experience constant growth of
The relevant tax rate is
The capital employed will start at $ and increase by the following percentages over the previous year amount.
Yr ; Yr ; Yr ; Yr ; Yr
Capital employed: ; ; ; ;
Calculate the brand equity of DoingWell and hence advise XZZ Ltd on the most they should pay for it
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