Filin Ltd is considering a new product which is expected to have a limited market life of
Question:
Filin Ltd is considering a new product which is expected to have a limited market life of three years. The accounting team have forecast the following data associated with this product and calculated Filin's traditional performance measure of product profit for the new product:
| 2021 ($m) | 2022 ($m) | 2023 ($m) |
Revenue | 47.7 | 49.608 | 51.59232 |
Costs |
|
|
|
Production costs | 25 | 24.8 | 28.5 |
Marketing costs | 8.7 | 5.8 | 3.4 |
Development costs | 4.8 | 2.7 | 0.1 |
Product profit | 9.2 |
Subsequently, the following environment costs have been identified from Filin Ltd's general overheads as associated with the production of the new product.
| 2021 ($m) | 2022 ($m) | 2023 ($m) |
Waste filtration | 2.1 | 2.4 | 2.4 |
Carbon dioxide exhaust extraction | 1.6 | 1.8 | 1.5 |
1) Additionally, after costs associated with closing down and recycling the equipment involved in production and cleaning up the site used for production are estimated at $13.6m in 2023.
2) Compute the difference in forecast profit margin with and without considering the environment costs. Express the answer in percentage.