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Usually payback period is used when there is a cashflow issue for the business - is that the case here?

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Risk – the highest possible number of customers taken as a base for NPV calculations. In this situation higher payback period means even higher risk of loss as the numbers NPV is based on are too optimistic.

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The decision is based on payback and completely disregards NPV

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The courses break into a new market ie that of Patlands - this could be a foot in the door of opening salons in Patland. We have an established brand that may do better in a new country than a newer brand. We would open up our customer pool and talent pool for hairdressers. We will be a step closer to global recognition of the brand

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the highest level of trainees (8000) has been used which is very obtimistic. this will give good results but may not be realistic

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future cashflows based on potentially inaccurate course demand.

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future cashflows based on potentially inaccurate course demand.

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payback superceding NPV is a questionable choice here since Trimyar made D$113m in revenue in 2024 and was able to pay out a $49m dividend

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Validity of research report used to obtain cashflow figures 

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Validity of research report used to obtain cashflow figures 

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Organisational reputation

Expansion into non-domestic regions following increased relationships with Patland

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NPV rarely considered (so not worth using the positive NPV), payback does not meet target of 3 years

Assuming the highest volume of new trainees (8,000 vs 5,000 and 3,000) - is this fair to assume this/is it too optimistic of an assumption?

Veracity of the external data source and the assumptions for course fees/number of trainees

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The highest number of trainees has been selected for the cash flows. Why has the 8000 been used? Is this realistic?

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con - the fixed rate bonds are redeemable well before we expect to recover out initial investment

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Does expanding into Patland align with our overall business strategy?

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Does expanding into Patland align with our overall business strategy?

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Financial

The payback period is already longer than the accepted 3 years, if CoC increases, the payback period will further extend

NPV is the absolute measure of profitability, if we are not using this method, why is payback preferred, on who's authority?

Payback is based on a scenario of 8,000 trainees, if this highest forecast is unreliable the payback period will also increase

Non-Financial

The forecast is based on external data which may not be suitable and reliable for our investment making decision process

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Financial:

Payback is below target - could lead to liquidity issues (esp as did big dividend payout last year)

Used best-case demand scenario so risk of actual demand coming in under this. How confident are we only the underlying probabilities / this deciison

Use our 'usual cost of capital' - is this relevant to this decision

Non- financial:

No info into customer perception of this expansion

No info into employee / franchise accaptance / willingness to buy into this

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Trimayr has low gearing - going for debt financing will be cheaper 

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Trimayr has low gearing - going for debt financing will be cheaper 

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is this the right move for Trimayr, this is a large investment for something that's not been done before. are we sure we want to proceed with this long term committment

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Given our high dividend payments, need to ensure the cashflow will not be negatively impacted and upset current investors who are used to a high payout

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Given our high dividend payments, need to ensure the cashflow will not be negatively impacted and upset current investors who are used to a high payout

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Bonds:

Cheaper source of finance (interest tax deductible)

Can match timescale for project

BUT

Higher geraing = difficulty securing SHs leading to higher cost of equity

May come with requirements

Rights issue

No transaction fees required to be paid

Easily acquired - no need to approach external providers

BUT

Effect on shareholdings long-lasting

More expensive - dividends not tax deductible