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Consumer Trend Canvas

The document contains calculations showing the probable price variation of a product over the plant's lifetime is between -13.46% to -11.11%. It concludes that based on a negative net present value, the project would be unprofitable, even though the discounted cash flow rate of return is above 12%, the internal rate of return threshold for profitability. The negative NPV takes precedence over the positive DCFROR in determining the project is unprofitable.

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Roger Fernandez
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46 views2 pages

Consumer Trend Canvas

The document contains calculations showing the probable price variation of a product over the plant's lifetime is between -13.46% to -11.11%. It concludes that based on a negative net present value, the project would be unprofitable, even though the discounted cash flow rate of return is above 12%, the internal rate of return threshold for profitability. The negative NPV takes precedence over the positive DCFROR in determining the project is unprofitable.

Uploaded by

Roger Fernandez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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PART C

CALCULATION
(45 − 52) × 100
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 (𝑙𝑜𝑤𝑒𝑟 𝑙𝑖𝑚𝑖𝑡) = = −13.46%
52
(16 − 18) × 100
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 (𝑢𝑝𝑝𝑒𝑟 𝑙𝑖𝑚𝑖𝑡) = = −11.11%
18

Probable Variation of Key Parameter Over Plant Life


(MARCS: 5 Years)

As a conclusion, the Net Present Value (NPV) shows negative value which indicate that the
project would be unprofitable. On the other hand, the discounted cash flow rate of return
(DCFROR) show value above 12% which is the value for the internal rate of return. As the
DCFROR higher than the value of the internal rate of return the project is considered to be
profitable. Since the NPV plays a major factor in decision whether or not to invest in a new
project compare to DCFROR as DCFROR are not necessarily good if the value is high. Thus
the project are consider as unprofitable base on the negative value of the NPV.

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