Adopting Sustainable Packaging for DuoLever Limited: A Financial Analysis

Running head: FINANCE
Finance

FINANCE 2
Memo
TO: DuoLever CEO
FROM- (Student Name)
DATE- May 19, 2018
Overview of the Background
Adoption of eco-friendly business plays an essential role in the international market. The level of
pollution is increasing day by day due to high level of consumption and production of plastic for
personal as well as for professional use ((Bian et al., 2016). Therefore, most of the companies
have got aware about such issues and have taken various initiatives to protect the environment
from global warming that is majorly caused by the production activity of the companies among
which one of the companies DuoLever Limited is planning to adopt sustainable mean in their
business to take participation in making the environment healthy. DuoLever Limited is one of
the personal care companies that offer beauty products to their consumers. The company uses
plastic for packaging their products that causes the issue of pollution in the environment. The
company has taken initiative to cope up from such challenge by adopting recyclable packaging
for their products to attract maximum number of consumer’s in sustainable manner without
harming the environment and can earn profit (Garlapati, 2016).
In the following report there will be detailed analysis of the option that will be used by the
company which can help them to grow sustainably with earning maximum profit.
Options adopted by Company
There are two options that is majorly available for the company the first one is setting up their
own plant and machinery for the production of recyclable packaging and the second option is
giving license or contract to their party for their packaging process. Such options are explained in
below points that can help the company to understand which option is useful for the company:

FINANCE 3
First Option
Calculation of net present value
0
1
2
3
4
5
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
$'000
$'000
$'000
$'000
$'000
$'004
Cash inflows
Sales revenue
4.16
4.33
4.50
4.68
4.87
Saving in Variable Cost
3.30
3.40
3.60
3.71
3.83
Less:
Machinery cost
20.00

FINANCE 4
Interest
1.40
1.40
1.40
1.40
1.40
Selling, Administrative and General Expenses
2.00
2.00
2.00
2.00
2.00
Depreciation
4.00
4.00
4.00
4.00
4.00
NPBT
-20.00
0.06
0.33
0.70
0.99
1.29
Less: Tax @ 25%
0.01
0.08
0.18
0.25
0.32
NPAT