Voda plc is considering launching a new product. The company accountant has just prepared calculations to show that the NPV of the product is estimated to be positive. She has discovered, however, that some items of information had not been provided to her prior to carrying out her calculations. They are as follows: 1. The new product can be used in conjunction with another profitable product that the company already produces. As a result, sales of the other product are likely to increase. 2. Two months earlier, the company signed a binding contract to lease a factory in anticipation of the product being launched. The first lease payment will be made in three months' time. What effect (increase/decrease/no effect) will these items of information have on the estimated NPV of the product? Item 1 OA. No effect B. No effect OC. Increase OD. Increase Item 2 143 Decrease No effect No effect Decrease

Voda plc is considering launching a new product. The company accountant has just prepared calculations to show that the NPV of the product is estimated to be positive. She has discovered, however, that some items of information had not been provided to her prior to carrying out her calculations. They are as follows: 1. The new product can be used in conjunction with another profitable product that the company already produces. As a result, sales of the other product are likely to increase. 2. Two months earlier, the company signed a binding contract to lease a factory in anticipation of the product being launched. The first lease payment will be made in three months' time. What effect (increase/decrease/no effect) will these items of information have on the estimated NPV of the product? Item 1 OA. No effect B. No effect OC. Increase OD. Increase Item 2 143 Decrease No effect No effect Decrease

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter5: Probability: An Introduction To Modeling Uncertainty

Section: Chapter Questions

Problem 18P: The J.R. Ryland Computer Company is considering a plant expansion to enable the company to begin...

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Vino plc is considering launching a new product. The company accountant has prepared calculations to show that the NPV of the product is estimated to be positive. She has just discovered, however, that some items of information had not been provided to her prior to carrying out her calculations. They are as follows: 1. The new product will be manufactured in a large factory which has spare capacity and where other products are also manufactured. It has recently been decided by senior management that the new product will be charged with 10% of the factory rent. 2. The new product will be financed partly by a loan. Interest charges are expected to be £80,000 per year. What effect (increase/decrease/no effect) will these new items of information have on the estimated NPV of the product? Item 1 OA. No effect OB. No effect OC. Decrease O D. Decrease Item 2 No effect Decrease Decrease No effect C
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