Perry Rose Case Study Essay Example | Topics and Well Written Essays - 2000 words

Perry Rose Case Study - Essay Example Additionally, a Memo will be prepared to the board advising them on whether to accept or reject the project. The study will put forth factors that a bank should consider prior advancing loans. Additionally, calculations will be utilized in order to determine whether the bank should grant the required increase in the overdraft for Gainsborough Fashions Ltd. In above connection, the Year0 Year1 Year2 Year3 Year4 year5 Year6 ?000 ?000 ?000 ?000 ?000 ?000 ?000 Equipments (500) - - - - - (100) Sales Revenue 0 450 470 470 470 470 470 (-)Less Cost Materials 0 0 126 132 132 132 132 Labour 0 0 90 94 94 94 94 Overheads 0 0 300 300 300 300 300 Add back Depreciation 0 0 120 120 120 120 120 Working Capital (180) - - - - - - Incremental cash flows 320 450 74 64 64 64 (36) (b) Calculate: (i) The project’s payback period. ... ii) The project’s net present value as at 31 December Year 0. Years Incremental cash flow Discount factor (12%) Present Value 0 (?500) 1 (?500) 1 ?450 0.893 ?401.85 2 ?74 0.797 ?58.98 3 ?64 0.712 ? 45.57 4 ?64 0.636 ? 40.70 5 ?64 0.567 ?36.29 6 (?36) 0.507 (?18.25) Net Present Value=?101.64 (c) Write a memo to the board advising on the acceptance or rejection of the project. (7 marks) Perry Rose Plc Finance Public Limited Company Bromsgrove 6th April 2013. To: The Board of Perry Rose Plc. From: Assistant Accountant of Perry Rose Plc Subject: Acceptance or Rejection of the Project The computation above indicates that the amount invested would be recovered within a very short time. This is based on the pay back period which shows that the amount invested will be recovered within a period of 1year and 4 months. Additionally, the above computations indicate that the Board of Perry Rose Plc should undertake the project because it has a positive net present value of ?101.64. Whereby , a positive net present value indicates that better returns will be derived by investing in this project (Hansen, Mowen and Guan, 2009). Therefore, I would recommend the company to undertake the project because the benefits outweigh the cost. Yours Sincerely Finance and Accounting Department 2. (a) Identify and discuss the major factors that a bank would take into account before deciding whether to grant an increase in the overdraft of a business. An overdraft involves amount of money given by bank account to the business and it should be repaid upon bank request. An overdraft provides current account holders with an opportunity to withdraw more funds than what it is already available in

Marketing feasibilty analysis Research Paper Example | Topics and Well Written Essays - 1000 words

Marketing feasibilty analysis - Research Paper Example Fuze is a non-carbonated fruit drink enriched with vitamins. It is one of the most popular drinks especially among school and college students. This study will focus on the marketing feasibility for Fuze drink in Saudi Arabia. It will also cover various aspects of feasibility study. In a country like Saudi Arabia where alcoholic drinks are banned, fruit drinks like Fuze have a good prospect for growth. Effective marketing can lead to even better results (Fuze Drink, â€Å"Fuze Drink†). Feasibility study is concerned with the analysis of various determinants of forces which affect the business in order to determine whether a business opportunity is economically, technically, financially and socially feasible or not. It is used as a supportive measure for business decision making process regarding viability of any project. It helps business entrepreneurs to take a realistic view of both positive and negative aspect of an opportunity (Hoagland, â€Å"What is a feasibility study?†). Marketing feasibility study is one of the dimensions of business feasibility study, which deals with analyzing the demand and supply of the product in the market and the factors affecting them. Variables like price, place, promotion and physical evidence, which are the main Ps of marketing, are evaluated for the feasibility of the product. Pricing the product: Pricing is considered as one of the most important aspect of marketing as it is related with success and failure of any product. If the price is soaring then customers may not accept it and if it is too low, then the company may not earn profit. Fuze Beverages need to adopt a pricing policy after taking into consideration different factors like, cost in production and advertising, price of its competitor’s product, and capacity of consumers. Market segmentation: A detailed study of market is necessary if Fuze drink wants to capture market through segmentation. At first a thorough analysis of market must be done. There are a