1. 1 Capex

2. 2 A company has the following project to evaluate. Sales, in units, over the next four years will be Year 1, 100,000 Yr 2 120,000 Yr 3 140,000 Yr 4 130,000 Price per unit GBP 5 Cost of sales 75 % of revenue Share of existing overheads GBP 10,000 pa Market research now finished cost GBP 20,000 New technician will be hired at GBP 15,000 pa Tax rate 20% Initial investment GBP 350,000 depreciated on straight line basis over the life of the project, 4 years

3. 3 Yr 1Yr 2Yr 3Yr 4 Sales Units 100,000120,000140,000130,000 Sales revenue500,000600,000700,000650,000 Costs, 75%375,000450,000525,000487,500 Technician 15,000 Depreciation 87,500 PBT 22,500 47,500 72,500 60,000 Tax @ 20% 4,500 9,500 14,500 12,000 PAT 18,000 38,000 58,000 48,000 + Depn105,500125,500145,500135,500 Investment ( 350,000) 12 % Factor.8929.7972.7118.6355 PV 383,92794,201100,049103,56786,110 NPV 33,927