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Lipsion Ltd company is thinking about investing in one of two potential new products for sale. The projections are as follows: year    revenue/ product s     revenue/ product v 0              (150,000) outlay              (150000) outlay 1                     14000                                  15000 2                      24000                                  25333 3                      44000                                  52000 4                       84000                               63333                                                                                                             Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Then decide which product should be selected and why ?

Lipsion Ltd company is thinking about investing in one of two potential new products for sale. The projections are as follows: year    revenue/ product s     revenue/ product v 0              (150,000) outlay              (150000) outlay 1                     14000                                  15000 2                      24000                                  25333 3                      44000                                  52000 4                       84000                               63333                                                                                                             Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Then decide which product should be selected and why ?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Lipsion Ltd company is thinking about investing in one of two potential new products
for sale. The projections are as follows:

year    revenue/ product s     revenue/ product v
0              (150,000) outlay              (150000) outlay
1                     14000                                  15000
2                      24000                                  25333
3                      44000                                  52000
4                       84000                               63333                                                                                                             Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Then decide which product should be selected and why ? 

 

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