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Analysis of the case of Repulse Travel Pharmaceuticals
Finance & Accounting
Pages 10 (2510 words)
Investment Analysis Executive Summary This report analyses the case of Repulse Travel Pharmaceuticals, a medium-scale UK firm that has just completed the product and market research for a spray product they are planning to call “Citronex”. Repulse is not certain whether Citronex should be introduced into the market, because the management fears that the financial risks of doing so are substantial.
The report recommends that Citronex be postponed for the moment until more careful studies should be made to ascertain price and demand are more higher or more stable. Table of Contents Executive Summary 2 Table of Contents 3 List of tables and figures 5 1.0 Introduction 7 1.1 Background 7 1.2 Aims and objectives 7 1.3 Methods and assumptions 8 2.0 Discussion 9 2.1 Profitability study 10 2.2 Undiscounted cash flow 10 2.3 Payback period 11 2.4 Discounted cash flow 11 2.4.1 Computation of WACC 11 2.4.2Net present value 12 2.4.3Profitability index 12 2.5 Sensitivity analysis 12 2.5.11% and 5% change in demand 12 2.5.21% and 5% change in selling price 13 2.6 Assessment of financial techniques used and effect of other business issues 14 3.0 Conclusion 15 Based on the foregoing studies, under conditions of certainty the Citronex project is profitable and assures the company of good cashflow, acceptable payback period, and net positive present value. However, under conditions of uncertainty, Citronex appears to be a risky project. ...
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