Increase Our Profit

In this case, we are supposed to decide which plan should be chosen by our company to increase our profit. We should make this decision by choosing the option that best suits our financial situation. To make things more concrete, we had to make relevant calculation and analysis in the light of some assumptions. We determined our costs and cash flow statement for all plans. Then, we calculated the initial investment at year "0" to see the quantity of money invested. We found the total cash flow at year "0" for Plan A as -$300,000, for plan B as -$350,000, for plan C as -$350,000.

In addition, we determined the interim cash flows to see how much cash flow will be generated with these plans. We found the interim cash flows for plan A as $16.200, $64.200, $100.200, $100.200, $150.200 between year 1 to 5, for plan B as $6.200, $18.200, $36.200, $55.400, $72.200, $69.200, $75.200, $75.200, $69.200, $148.200 between year 1 to 10, for plan C as $6.200, $18.200, $36.200, $55.400, $72.200, $-81.800, $124.200, $124.200, $124.200, $224.200 between year 1 to 10.

Then, finally we found termination cash flow for plan A as $152600 at year 5, for plan B as $150560, for plan C as $226600. Finally, to decide which plans are more appropriate and profitable our company, we utilized from a primary decision criteria, which is NPV.we should choose the plan that has the greatest NPV. As a result, we calculated the NPV with respect to the total cash flows mentioned above. We found NPV for plan A as $13.865,09, for plan B as ($5.490,78), for plan C as $9.903,92.NPV of plan A is higher than the others.

1) We should find our costs for all plans. First, we should determine cost of goods sold and marketing costs for each plan. We calculated cost of goods sold in accordance with given sales and variable costs rate approximately 60 percent.

2) We should first