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Essay / Research Paper Abstract
This 14 page paper considers a case study provided by the student where a contract is offered and a company has to decide whether it is worth accepting, and if it is worth accepting which options regarding investment are worth taking up. This is undertaken using NPV, IRR and profitability index. Influencing factors are risks are also considered. Example calculations are demonstrated to show the student how they may carry out similar calculations. The bibliography cites 5 sources.
Page Count:
14 pages (~225 words per page)
File: TS14_TEcase01.rtf
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Unformatted sample text from the term paper:
are available regarding the project and its potential. Market. The initial development costs of 10 million are being provided by the client, however, costs over and above this will need
to be found by the company. In any projection there need to be various scenarios considered, here there are two different scenarios. One where an increase in marketing will increase
the projected market share from 20% to 30%, within this there also needs to be consideration given to low, medium and high demand, AS these have not been weighted in
this case we will consider them all with equal weighing and with equal possibility. The first aspect that needs to be considered in the use of a tool to
measure how much this project would be worth over the three years. There is no possibility of extension of the project beyond this due to the way the country itself
is expected to have developed the ability to supply itself. The case gives total figures, however, there is also a lack of indication of the spread of the business and
revenue as well as costs over the three years. The three scenarios of demand at low medium and high with a 1 million marketing budget are 5,000, 8,000 and
10,000 and selling prices of 20,000, 18,000 and 16,000 respectively. The first issue is to look at how this will relate to the finances and the way that any profit
will emerge from this. This can then be used to consider what the potential profit is as well as at which point the break even point will be reached. There
are several ways that this can be calculated, however, with variable costs of 8,000 this appears t be the case regardless of how many units are produced. However, for the
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