Incremental revenue required from the campaign

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1. Dyson is introducing a new vaccuum cleaner to the market. The COGS to produce one of these vaccuum cleaners are 50$. SG&A expenses associated with a single machine are 10$. Production capacity to make 500000 vaccuum cleaners per year cost 50$million(i.e capital expenditures); such capacity is estimated to have a 10 year life.

a. At what price should the company sell the product if it wishes to have an EBIT margin of 20%

b. at what price should it sell the product if it wishes to have a ROIBT of 25%

2. A korean auto manufacturer is considering a 1million holiday advertising campaign for its cars that have an average contribution margin of 45%. The comany wants to realize a return on marketing investment(ROMI) of at least 10%. what's the minimum of incremental revenue required from the campaign?

3. Plastic film sell their film by are, but buy the plastic raw material (polythelene) by mass. A plastic manufacturer has developed a grade pf PE that is 30% of stronger than the current film grade product and doesn't cost any more to make. Thus film produces can make a film that has the same strength is 3% thinner. if the current grade of PE is priced to the customer at 1$ kg. how should the manufacturer price the new grade such that it captures 40% of the additional value.

4. Company and its competitors are operating at full capacity. Customer A has just renewed its contract for another 5 years at the following terms and conditions price =4$kg, standard delivery and service, payment terms=30days. You are renegotiating customer's B contract and you want to receive the same poacket margin as for customer . Customer B is quite demanding, it requires extra service worth 0.10$ kg and can only pay in 60 days. Assuming that your company's cost of capital is 12%. What price should you target for customer B.

5. A company invest 5 million, The variable margin for revenues associated with this investment will be 50%. Total fixed cost including SG&A are 700000$ year. Assume a 10 year useful life for the fixed assets, a 35% tax rate and that net working capital id 20% of revenues. What is ROI for each of the first 3years of operation. b, What's the net present value of the total annual cash flows at 10%discount rate at the end of 4years operation a company invest 5 million( assume in year 0) and obtains revenues as follow year 1=1miilion, year=2 miilion, year 3=3 milion, year 4=4 million, year 5 to 15=5million

Reference no: EM131030091

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