SolarNest is choosing equipment for a new panel factory. It has £280,000 available.
Option 1: Equipment A costs £260,000 and has a forecast ARR of 15%. It requires specialist training and can produce 7,000 panels a year.
Option 2: Equipment B costs £190,000 and has a forecast ARR of 12%. Employees already know how to use it and it can produce 5,200 panels a year.
Justify which one of these two investments SolarNest should choose.
37 exam-style questions on Edexcel GCSE Business 2.4 Making financial decisions, covering 2.4.1a Gross and net profit, 2.4.1b Margins and average rate of return, 2.4.2a Using quantitative business data, 2.4.2b Financial information: understanding performance, and 2.4.2c Financial information: making business decisions. Each one has a worked solution and a mark scheme showing where the marks go.