Question: Please someone help me solve this 12.1 1.1 1 4 .2. 1. 3 . 1. 4 . 1. 5 . 1 . 6 . 1


Please someone help me solve this


12.1 1.1 1 4 .2. 1. 3 . 1. 4 . 1. 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 .10 . 1 . 11. 1 . 12 . 1 .13 . 1 .14. 1 .15. .. .17. 1.18. (h) SKIN DEEP PLC, a supplier to Tesco Plc and Sainsbury plc is considering an investment proposal to extend its existing product range and produce a highly advanced anti-aging product, Revital. A recently commissioned market research report, costing f100,000 has revealed significant growth in the anti-aging cosmetics market. This growth is expected to continue given the rise in consumer consciousness and awareness of aging signs, particularly amongst the younger generation. Further information on the investment proposal is as follows: Initial investment in new equipment $1,600,000 Selling price of Revital $10 per unit Relevant Variable operating costs t8 per unit Relevant Fixed operating costs $500,000 per year The following indicates expected demand for the Revital: Year 1 2 3 4 Demand (units) 600,000 500,000 100,000 55,000 It is expected that all units of Revital produced will be sold, in line with the company's policy of keeping no inventory of finished goods. Skin Deep Plc depreciates all non- current assets on a straight-line basis and depreciation of the new equipment is included in the annual fixed operating costs. No terminal value or equipment scrap value is expected at the end of the four years, when production of Revital is planned to end. Investment Criteria: . Skin Deep Plc uses a discount rate of 12% per year. . A target accounting rate of return of at least 18% per year is desirable. A target payback period of within 1 year is desirable. Calculate the following values for the investment proposal of producing Revital:12. | ' 1 . 1 1 1. 1 . 2 . 1 3 . 1 4 . 1 5 . 1 . 6 . 1 . 7 . 1 . 8 . 1 . 9 . 1 . 10 . 1 . 11 . 1 . 12 . 1 . 13 . 1 . 14 . 1 . 15 . . . . 17 . 1 . 18 Calculate the following values for the investment proposal of producing Revital: i. Payback Period (PP); ii. Net Present Value (NPV); and iii. Accounting Rate of Return (ARR). (12 marks) (i) Discuss your findings in part (h) and advise whether the investment proposal of producing Revital is financially acceptable. Your answer should be based on your findings in part (h) and any other relevant information. (6 marks) (i) Discuss five areas where a retailer such as Tesco Plc or Sainsbury's Plc would benefit from using the information covered in your business finance module. (10 marks)
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