2) New title costing proposal for Electronic Publishing using Net Present Value

Electronic Publishing Net Present Value Calculation      
Title costing sheet          
           
30,0% 0 1 2 3 4
           
Product sales          
version 1 20  80  40  20  10 
version 2   25  90  35  25 
           
Net licence income   30  35  30  25 
Net Commissions   12  15  18  12 
Total Receipts 20  147  180  103  72 
           
New title costs 80         
Update costs   20  20  20  10 
Manufacture and distribution 6  26  30  15  15 
Promotion 10  40  35  30  25 
Other direct costs 10  10  10  10  10 
Total Payments 106  96  95  75  60 
           
Cashflow -86  51  85  28  12 
Cumulative Cashflow -86  -35  50  78  90 
Discount Factor 1,000  0,769  0,592  0,455  0,350 
Adjusted Cashflows -86  39  50  13  4 
           
NPV = 20  IRR = 46,4% Payback = 1,50 
        (years)   
           
           
           
nb. The above are based on receipts and payments, not on profits and expenses     
nb1 Taxation has been excluded     
nb2 many publishers employ contract editors and designers. The contract costs of these     
freelancers would be included as they are direct costs.      

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