Akif Mahmood
Arsalan Javaid
Siddiqi
Hafiz Hamza
Najaf Ali
Nomah Javed
Noor Us
SubahHasan
Applied
Corporat
e
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Option 3: MinimizeCannibalization
NPV
OPTION 1
OPTION 2
OPTION
3
3,301,623
.58
5,441,947
.96
(128,874.
90)
IRR
24%
25%
15%
Conclusion:
Based on our analysis we conclude that Option2 (Revenue driven) strategy offers
the highest NPV and IRR thus being the project with the maximum value addition to
the firm. The price decrease increases the sales volume substantially which more
than makes up for the loss of price.
This strategy also effectively cancels out the cannibalization effect on other
products, however cannibalization is a matter that should be given high attention
Page | 4
to, since the rate is substantial (70% of New Sales). If countered and lowered
effectively, it can increase the projects attractiveness.