In the end of the task 3, write about if they need to take the van to more events to reduce the costs of the van = more profitable - suggest attending weddings and pop up pubs

Do a table for calculations of each of the cities - highlight in red and green the best and worst

ARR (Accounting Rate of Return) = average annual operating profit/average amount invested in the project x 100

• Operating profit is after the depreciation has been charged/taken off
• limitations: doesn’t account for the cash flow timing, doesn’t account for actual value (is only relative), ignores the time value of money (£100 is not £100 in 5 years time)

Depreciation doesn’t affect cash flow - doesn’t exist - it’s a non cash adjustment

Payback Period

• how long it will take to pay back the initial investment
• eg. 2 years and 10 months to pay back initial investment ( to calculate the 10 months, the previous negative cash flow divided by the next year’s inflow x 12 months) - round up to the next month if .4 etc.
• limitations: ignores cash flows after the paid period is done (could be making less after the payback period is done), ignores cash flow timing & timing of money value

Net present value (NPV)

• recognises £100 now isn’t £100 next year