CPP plc is involved in the construction and painting of newly built apartments. CPP plc uses different

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Question:

CPP plc is involved in the construction and painting of newly built apartments. CPP plc uses different colors to give the building and apartments beauty and attraction to potential viewers, buyers, and investors. It is the policy of the company to mix primary colors to obtain secondary colors or upgrade the colors from one primary color to another. The primary colors are; Red, Yellow, and Blue. CPP plc can do this at one of three different colors; Red, Yellow, or Blue to match the Red, Yellow or Blue levels of construction and painting contracts that the company gets. The probability of painting colors being Red is 0.25, being Yellow is 0.4 and Blue is 0.35. The contract must be entered into before the painting quality will be known.

Colors Contract costs:	£ million	Colors Sales Revenue	£ million
Red	3.5	Red	25
Yellow	2.5	Yellow	18
Blue	1.5	Blue	7.4
Royal Docks can upgrade the colours for an additional costs as follows:
Blue to Yellow			2.2
Blue to Red			4.0
Yellow to Red			2.6

The Junior Management Accountant estimates the variable costs as follows: 40%, 35%, and 30% for Red, Yellow, and Blue sales revenue respectively. There is no refund available if the level of demand is overestimated and CPP plc enters into the wrong level of contract.

REQUIRED:

Prepare a summary that shows the forecast net margin that the company will earn for the following year for each possible outcome

Discuss maximax and minimax criteria. Using expected values advise the company on the colors to use for the apartments

Calculate how much the company should be prepared to pay consultants for perfect information on the purchase of colors in the coming year

Covid-19 has made several customers of Barclays bank unprofitable and a menace to the financial sustainability of the banking industry. In line with customer profitability analysis (CPA), discuss CPA and show how Barclays bank can convert unprofitable customers to profitable customers.