DuoLever Limited: Financial Analysis of Recyclable Product Options

This report analyzes two options for DuoLever Limited, a personal care product company, to implement recyclable packaging. The first option involves investing in the production of recycled sachet plastic, while the second involves licensing the use of a patented option to an external company. The analysis includes calculating Net Present Value (NPV) for each option under base, best, and worst-case scenarios. The report considers sales revenue, variable costs, and other expenses to determine the financial viability of each option, including uncertainty analysis. The findings suggest that neither option presents a positive NPV, indicating potential financial challenges for DuoLever in adopting either strategy. The report concludes with recommendations based on the financial analysis, emphasizing the impact of sales fluctuations on profitability.

Running Head: FINANCE 0
Finance
(Student Name)

FINANCE 1
Table of Contents
Memo...............................................................................................................................................2
Introduction......................................................................................................................................2
Analysis...........................................................................................................................................2
1st Option......................................................................................................................................3
Uncertainty Analysis................................................................................................................4
2nd Option.....................................................................................................................................4
Uncertainty Condition..............................................................................................................6
Recommendations............................................................................................................................6
Conclusion.......................................................................................................................................6
References........................................................................................................................................8

FINANCE 2
Memo
TO: DuoLever CEO
FROM- (Student Name)
DATE- May 16, 2018
Introduction
In recent scenario, most of the companies have adopted various means to achieve growth and
success in the market. They ignore its responsibilities towards the environment and society that
harm the environment at greater level. The number of plastic consumption by the companies is
increasing day by day that affected overall environment at greater level (Hayward et al., 2017).
One of the companies DuoLever Limited is one of the company that deal in the personal care
products. The company offer variety of personal products to their consumers that are related to
skin as well as hair products. The company uses plastic for packaging their products. However,
the company has decided to use recyclable products in their business to take initiatives towards
sustainable business.
In the following part there will be detailed analysis of the Option that the company can use to
produce recyclable products for their business

FINANCE 3
Analysis
While adopting recyclable Option in its business, the company is required to analyze which
option is required for the company to adopt. They can either add production of recycled sachet
plastic to the portfolio of business or can also give license use of the patented Option.
First Option
Calculation of net present value
0 1 2 3 4 5
Ye
ar
0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
$'0
00
$'
00
0
$'
00
0
$'
00
0
$'
00
0
$'
00
4
Cash inflows
Sales
revenue
4.
16
4.
33
4.
50
4.
68
4.
77
Saving
in
3.
30
3.
40
3.
60
3.
71
3.
83

FINANCE 4
Variabl
e Cost
TOTA
L
INFLO
WS
7.
46
7.
73
8.
10
8.
39
8.
60
Less:
Machin
ery cost
20.
00
Interest
1.
40
1.
40
1.
40
1.
40
1.
40
Selling,
Admini
strative
and
General
Expens
es
2.
00
2.
00
2.
00
2.
00
2.
00

FINANCE 5
Depreci
ation
4.
00
4.
00
4.
00
4.
00
4.
00
NPBT
-
20.
00
0.
06
0.
33
0.
70
0.
99
1.
20
Less: Tax @ 25%
0.
01
0.
08
0.
18
0.
25
0.
30
NPAT
0.
04
0.
24
0.
53
0.
75
0.
90
Add:
Capital
allowan
ces
4.
00
4.
00
4.
00
4.
00
4.
00
Net cash outflow
-
20.
00
4.
05
4.
24
4.
53
4.
75
4.
90
8% discount rate 1.0
00
0.
92
0.
85
0.
79
0.
73
0.
68

FINANCE 6
6 7 4 5 1
Present value
-
20.
00
3.
75
3.
64
3.
59
3.
49
3.
33
NPV
-
2.
20
Calculation of net present value (Worst Case Scenario)
0 1 2 3 4 5
Ye
ar
0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
$'0
00
$'
00
0
$'
00
0
$'
00
0
$'
00
0
$'
00
4

FINANCE 7
Cash inflows
Sales
revenue
4.
16
4.
33
4.
50
4.
68
4.
77
Saving
in
Variabl
e Cost
3.
30
3.
40
3.
60
3.
71
3.
83
TOTA
L
INFLO
WS
7.
46
7.
73
8.
10
8.
39
8.
60
Total
Cash
Inflow
in
worst
case
6.
71
6.
95
7.
29
7.
55
7.
74
Less:
Machin
ery cost
20.
00

FINANCE 8
Interest
1.
40
1.
40
1.
40
1.
40
1.
40
Selling,
Admini
strative
and
General
Expens
es
2.
00
2.
00
2.
00
2.
00
2.
00
Depreci
ation
4.
00
4.
00
4.
00
4.
00
4.
00
NPBT
-
20.
00
-
0.
69
-
0.
45
-
0.
11
0.
15
0.
34
Less: Tax @ 25%
-
0.
17
-
0.
11
-
0.
03
0.
04
0.
08
NPAT - - - 0. 0.

FINANCE 9
0.
51
0.
34
0.
08 12 25
Add:
Capital
allowan
ces
4.
00
4.
00
4.
00
4.
00
4.
00
Net cash outflow
-
20.
00
3.
49
3.
66
3.
92
4.
12
4.
25
8% discount rate
1.0
0
0.
93
0.
86
0.
79
0.
74
0.
68
Present value
-
20.
00
3.
23
3.
14
3.
11
3.
03
2.
89
NPV
-
4.
60
Calculation of net present value (Best Case Situation)

FINANCE 10
0 1 2 3 4 5
Ye
ar
0
Ye
ar
1
Ye
ar
2
Ye
ar
3
Ye
ar
4
Ye
ar
5
$'0
00
$'
00
0
$'
00
0
$'
00
0
$'
00
0
$'
00
0
Cash inflows
Sales
revenue
4.
16
4.
33
4.
50
4.
68
4.
77
Saving
in
Variabl
e Cost
3.
30
3.
40
3.
60
3.
71
3.
83
TOTA
L
INFLO
7.
46
7.
73
8.
10
8.
39
8.
60

FINANCE 11
WS
Total
Cash
Inflow
in best
case
8.
21
8.
50
8.
91
9.
23
9.
46
Less:
Machin
ery cost
20.
00
Interest
1.
40
1.
40
1.
40
1.
40
1.
40
Selling,
Admini
strative
and
General
Expens
es
2.
00
2.
00
2.
00
2.
00
2.
00