MATHS LINK

Question 1

cost plus pricing

Answer 1

price + %mark up

Question 2

Labour turnover

Answer 2

(number of employees leaving / average number of employees) x 100

Question 3

Market size

Answer 3

(your market sales / whole market sales) x 10

Question 4

payback period

Answer 4

payback occurs when the CUMULATIVE cash flow reaches zero

FORMULA: (amount needed / next amount ) x 12

Question 5

Average rate of return (ARR)

Answer 5

1 - calculate total profit over the lifetime of the project by adding all the net cash flows and deducting the initial outlay
2 - divide by the number of years the project lasts
3 - formula: (average annual profit / initial outlay) x100

Question 6

Net present value (NPV)

Answer 6

each years net cash flow is multiplied by the relevant discount factor.
These are then totalled to give the overall NPV of the project (including investment cost)