You are thinking of starting Peaco, which will produce Peakbabies, a product that competes with Ty's Bean Babies. In year 0 (now), you will incur costs of $4 million to build a plant. In year 1, you expect to sell 80,000 Peakbabie for unit prices of $25. The price of $25 will remain unchanged through years 1 - 5. Unit sales are expected to grow by the same percentage (g) each year. During years 1 -5, Peaco incurs two types of costs: variable costs and SG&A costs. Each year, variable costs equal half of revenue. During year 1, SG&A costs equal 40% of revenue. This percentage is assumed to drop 2% per year, so during year 2, SG&A costs will equal 38% of revenue, and so on. Peaco's goal is to have profits for years 0-5 sum to 0 (ignoring the time value of money). This will ensure that the $4 million investment in year 0 is paid back by the end of year 5. What annual percentage growth rate 'g' does Peaco require to pay back the plant cost by the end of year 5? Is it possible to see the formulas in excel?
You are thinking of starting Peaco, which will produce Peakbabies, a product that competes with Ty's Bean Babies. In year 0 (now), you will incur costs of $4 million to build a plant. In year 1, you expect to sell 80,000 Peakbabie for unit prices of $25. The price of $25 will remain unchanged through years 1 - 5. Unit sales are expected to grow by the same percentage (g) each year. During years 1 -5, Peaco incurs two types of costs: variable costs and SG&A costs. Each year, variable costs equal half of revenue. During year 1, SG&A costs equal 40% of revenue. This percentage is assumed to drop 2% per year, so during year 2, SG&A costs will equal 38% of revenue, and so on. Peaco's goal is to have profits for years 0-5 sum to 0 (ignoring the
Is it possible to see the formulas in excel?
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