Question: Please explain and show excel formulas om to 18. (Cash-flow analysis) The Aphrodite Company is a manufacturer fume. The company is about to launch a

om to 18. (Cash-flow analysis) The Aphrodite Company is a manufacturer fume. The company is about to launch a new line of products. The marketing department has to decide whether to use an aggressive or regular campaign. in al Aggressive campaign Initial cost (production of commercial advertisement using a top model): $400,000 First month profit: $20,000 Monthly growth in profit (month 2-12): 10% After 12 months the company is going to launch a new line of products and it is expected that the monthly profits from the current line would be $20,000 forever. Regular campaign Initial cost (using a less famous model): $150,000 First month profit: $10,000 Monthly growth in profits (month 212): 6% Monthly profit (month 13-00): $20,000 The annual cost of capital is 7%. Calculate the NPV of each campaign, and decide which campaign the company should undertake. E14 X fx E D F G H B C APHRODITE PERFUME 7% 2 Cost of capital 3 Aggressive campaign 400,000 20,000 10% 20,000 Regular campaign 150,000 10,000 6% 20,000 Cash flow -400,000 20,000 4 5 Initial cost 6 First month profit 7 Proft growth in months 2-12 8 Monthly profit for months 12- 9 10 Month 11 0 12 1 13 2 3 15 4 16 5 17 6 18 7 19 20 9 21 10 22 11 23 12 PV of future profits from months 24 12 - Infinity 25 26 NPV 27 28 29 30 31 32 33 34 35 36 37 2
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
