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Assume that after further research and examination, marketing contributed only 50% to new sales in UK, Bulgaria, and Poland, but 100% to new sales in Romania. Your supervisor has asked you to formulate a decision as to whether the company should continue the marketing campaigns.

Please explain how IRR, NPV, and payback were calculated.

F1 Impact factor	100%	Estimate of contribution of marketing to new sales
	Year 0	Year 1	Year 2	Year 3
Sponsorship Related Sales		$ 500,000	$ 750,000	$ 1,000,000
Romania Campaign		$ 2,500,000	$ 2,500,000	$ 2,500,000
UK Campaign			$ 2,500,000	$ 2,500,000
Bulgaria Campaign			$ 2,500,000	$ 2,500,000
Poland Campaign			$ 2,500,000	$ 2,500,000
Total revenues		$ 2,500,000	$ 10,000,000	$ 10,000,000
COGS		$ (1,750,000)	$ (7,000,000)	$ (7,000,000)
Net Profit		$ 750,000	$ 3,000,000	$ 3,000,000
Sponsorship cost	$ (250,000)	$ (850,000)	$ (850,000)	$ (850,000)
Marketing activation cost		$ (250,000)	$ (600,000)	$ (750,000)
Total Costs	$ (250,000)	$ (1,100,000)	$ (1,450,000)	$ (1,600,000)
EBIT	$ (250,000)	$ (350,000)	$ 1,550,000	$ 1,400,000
Tax	$ 96,250	$ 134,750	$ (596,750)	$ (539,000)
Net Profit (or loss) After Tax	$ (153,750)	$ (215,250)	$ 953,250	$ 861,000
IRR	132%
NPV	$916,813
Payback (years)	1.4
		$ (369,000)	$ 584,250
			0.387096774

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