Question: ZipUp ( Pty ) Ltd ( ZipUp ) is a clothing retailer with branches nationwide. ZipUp is not a registered VAT vendor. ZipUp is considering

ZipUp (Pty) Ltd (ZipUp) is a clothing retailer with branches nationwide. ZipUp is not a registered VAT vendor. ZipUp is considering rolling out a new clothing line and is evaluating two mutually exclusive clothing lines. Clothing line 1: Casual Joe Clothing line 2: Perfecto The Casual Joe clothing line and Perfecto clothing line will require an initial investment of R270400 and R310300 respectively. The following are the findings of market research performed by ZipUp: Casual Joe Perfecto Chance of occurrence Success of clothing line Success of clothing line Net cash profit generated per year from the clothing line Net cash profit generated per year from the clothing line Popular R580650? Popular Chance of occurrence Average R412900 R37170051% Average 23% Failure R384500 R18058029% Failure 43% R176600? The standard deviation of the Casual Joe clothing line is R138343.42 and R103756.41 for the Perfecto clothing line. ZipUp applies a discount rate of 8.4% to investment options with a co-efficient of variation 0.35 and lower. Thereafter, 1.1% is added to the discount rate for every 0.1 increment. REQUIRED: 2.1. Assist ZipUp (Pty) Ltd and calculate the expected net cash profit per year for the Casual Joe and Perfecto clothing lines respectively.

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