Reference no: EM131868735

Choose one of the tasks below and write a short report including

Executive summary (10%)

Introduction and review of the proposal (10%)

Appropriate calculations and tables with explanations

Graphs and any sensitivity analysis can be included. (50%)

A discussion of your findings and any qualitative issues (20%)

Explaining your recommendation including any further analysis that might be needed before a final decision is made. (10%)

You should aim for 500 words in total. Ignore any tax and inflation in your analysis.

Short tasks

Task B – Aberdrive

Aberdrive will be a new local “van and driver” company. They aim to buy ten vans for £12,000 each, which they anticipate selling for £2,000 each at the end of year 4. There will also need to be a large initial advertising campaign costing £50,000.

They anticipate customers paying a daily hire rate of £110.00 with a daily variable cost to Aberdrive of £17.50. In addition, the drivers will be paid £12,500 per year. The table below shows the expected volume of business (days per year) and the number of drivers that the company intends to employ each year.

                                                Business (days)            Staff required

                        Year 1              1,600                                       7

                        Year 2              1,760                                       8

                        Year 3              1,920                                       9

                        Year 4              2,250                                       9

You are advised that you should use a cost of capital of 21% when assessing this scheme.