1. Why is the Net Present Value (NPV) method used to evaluate projects?

NPV = the principal + the discounted amount to the present value of future cash flows. We basically discounts future earned money to today amount to see if the project is worth investing.

2. With the Business Processes and, Innovation and learning perspectives of the Balanced Scorecard (BSC) in mind, identify some possible performance measures for a face mask manufacturing business.

Consider how the measures might ultimately link to improving financial performance.

Customer: Reduce bad debt ratio, Increase marketing to new customers: Increase revenue

Internal business processes: Transparent raw material managements, practice good accounting conducts: Reduce theft -> reduce operational costs

Innovation and learning: Innovate new features: Increase competitiveness and R&D cost-> increase revenue in the long run

3. Briefly explain what contributing margin tells you about a business.

Total contribution margin per unit = Total revenue per unit - total variable cost per unit

It tells the portion of the price contributes to the profit. It tells the types of product the company is offering. Generally, products with high turnover have low margin. It is usually common consumer goods. And vice versa, which is usually high - end goods.