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We having been selling our product in Canada for the past three years, but one year from now that contact will come to an end. replace those sales, we have three choice available to us enter the Asia, Africa or South America market. To It will take a year so setup each of the three alternatives. We have a complicated expansion plan working for the last 5 years for additional sales units, which we can sell in Canada or other markets are list below. This aggressive production expansion plan will continue for at least 6 years. Therefore we will not have an issue with new product to sell. 1 Use the data provide to forecast, what sales will be for next four years (year to set up new market - year 1/ still selling in Canada) and the three subsequent years (2,3 & 4) and how accurate that forecasting method is. Show all your workings and different methods tried. 1 2 3 4 5 6 7 8 9 10 11 12 Sales Per Quarter Units 1,850 2579 3785 4075 4925 6014 6345 7014 8214 8635 9114 10250 Year 1 Asia Africa South America Year 2 Year 3 2 Use the Forecast sales for year 5, 6 and 7 and cost data provided to Calculated the net present value for each alternative for three years Use a Cost of Capital figure of 20%. All prices are in euro. Decide which market we should enter. Work out the IRR for the winner Project Price -500,000 -375,000 -425,000 Profit= Sales in Euro* 1- Cost of Sales Cost of Sales 79% 76% 72% Sales Price 16 11

We having been selling our product in Canada for the past three years, but one year from now that contact will come to an end. replace those sales, we have three choice available to us enter the Asia, Africa or South America market. To It will take a year so setup each of the three alternatives. We have a complicated expansion plan working for the last 5 years for additional sales units, which we can sell in Canada or other markets are list below. This aggressive production expansion plan will continue for at least 6 years. Therefore we will not have an issue with new product to sell. 1 Use the data provide to forecast, what sales will be for next four years (year to set up new market - year 1/ still selling in Canada) and the three subsequent years (2,3 & 4) and how accurate that forecasting method is. Show all your workings and different methods tried. 1 2 3 4 5 6 7 8 9 10 11 12 Sales Per Quarter Units 1,850 2579 3785 4075 4925 6014 6345 7014 8214 8635 9114 10250 Year 1 Asia Africa South America Year 2 Year 3 2 Use the Forecast sales for year 5, 6 and 7 and cost data provided to Calculated the net present value for each alternative for three years Use a Cost of Capital figure of 20%. All prices are in euro. Decide which market we should enter. Work out the IRR for the winner Project Price -500,000 -375,000 -425,000 Profit= Sales in Euro* 1- Cost of Sales Cost of Sales 79% 76% 72% Sales Price 16 11

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter17: Activity Resource Usage Model And Tactical Decision Making
Section: Chapter Questions
Problem 14E: Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell...
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We having been selling our product in Canada for the past three years, but one year from now that contact will come to an end. To replace those sales, we have three choice available to us enter the Asia, Africa or South America market. It will take a year so setup each of the three alternatives. We have a complicated expansion plan working for the last 5 years for additional sales units, which we can sell in Canada or other markets are list below. This aggressive production expansion plan will continue for at least 6 years. Therefore we will not have an issue with new product to sell. Step 1 Use the data provide to forecast, what sales will be for next four years (year to set up new market - year 1/ still selling in Canada) and the three subsequent years (2,3 & 4) and how accurate that forecasting method is. Show all your workings and different methods tried. 1 2 3 4 5 6 7 8 9 10 11 12 Sales Per Quarter Units 1,850 2579 3785 4075 4925 6014 6345 7014 8214 8635 9114 10250 Asia Africa South America Year 1 Year 2 Step 2 Use the Forecast sales for year 5, 6 and 7 and cost data provided to Calculated the net present value for each alternative for three years Use a Cost of Capital figure of 20%. All prices are in euro. Decide which market we should enter. Work out the IRR for the winner = Year 3 Project Price -500,000 -375,000 -425,000 Profit Sales in Euro* 1- Cost of Sales Cost of Sales 79% 76% 72% Sales Price 16 13 11
Transcribed Image Text:We having been selling our product in Canada for the past three years, but one year from now that contact will come to an end. To replace those sales, we have three choice available to us enter the Asia, Africa or South America market. It will take a year so setup each of the three alternatives. We have a complicated expansion plan working for the last 5 years for additional sales units, which we can sell in Canada or other markets are list below. This aggressive production expansion plan will continue for at least 6 years. Therefore we will not have an issue with new product to sell. Step 1 Use the data provide to forecast, what sales will be for next four years (year to set up new market - year 1/ still selling in Canada) and the three subsequent years (2,3 & 4) and how accurate that forecasting method is. Show all your workings and different methods tried. 1 2 3 4 5 6 7 8 9 10 11 12 Sales Per Quarter Units 1,850 2579 3785 4075 4925 6014 6345 7014 8214 8635 9114 10250 Asia Africa South America Year 1 Year 2 Step 2 Use the Forecast sales for year 5, 6 and 7 and cost data provided to Calculated the net present value for each alternative for three years Use a Cost of Capital figure of 20%. All prices are in euro. Decide which market we should enter. Work out the IRR for the winner = Year 3 Project Price -500,000 -375,000 -425,000 Profit Sales in Euro* 1- Cost of Sales Cost of Sales 79% 76% 72% Sales Price 16 13 11
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