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What is the problem? Sensitivity Analysis What numbers impact the NPV?

  • (Raw) material costs - labor costs
  • Sales revenues
  • Other operating expenses
  • Capital Budgeting Analysis

How will this project contribute to the firm's value?

Which questions do we have to answer? 1) What are the relevant cash flows?

  •  Should we consider the erostion of the existing product?
  •  What are the NPV, IRR, payback, discounted payback and profitability index?
  •  Sensitivity analysis
  •  What are the benefits and risks for undertaking this project?
  •  Should Bebida Sol undertake this project? What are the relevant cash flows?

Conclusion

Should Bebida Sol commence this product?

Mexico

High rates of overweight/obesity due to high soft drink consumption Bebida Sol

Soft drink company in Mexico

Nola Kola

A no calory alternative soft drink

Erosion Costs?

NPV, IRR, Profability Index. Payback Period

Benefits and Risks

Benefits:

Increased market share for Bebida Sol

- Increased net Income

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91779470

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