1.

Four reasons people may opt to buy from supermarkets would be:
- Supermarkets buy products in bulk , having economies of scale so the
consumers are able to buy those goods at cheaper price.
- As supermarkets are large and stationery consumers have the advantage
to return false or tampered goods.
- As they function in large basis the service provided to the consumers is
very convenient.
- Consumers get the chance to choose from a wide variety of different
products, all under one roof.

2. Trading A/c as on 31
st
December 2007

Particulars Amount ($) Amount($)
Sales Revenue 60000
Less: Cost of goods sold 12000

Gross Profit 48000

Profit and Loss A/c as on 31
st
December 2007
Particulars Amount ($) Amount($)
Gross Profit 48000
Less: Expenses 24000

Net Profit 24000

3. Plan A -Years Amount C.F.
0 (100000) -
1 48000 48000
2 48000 96000
3 48000 144000
Therefore, Payback Period = Initial Investment / Net Profit
Initial Investment = 100000
Net profit = 48000 (11000 + 12000) = 25000
= 100000 / 25000 = 4 years

5. The costs for initiating the plan for van are:
- High initial costs.
- Additional costs are more workers will be required, maintenance costs.
- Exogenous shocks such as accidents increase loss to the business.
- The decision made may not be accurate, as qualitative data is not counted.

The benefits for initiating the plan for van are:
- It will bring extra profits to the business.
- Consumers will be happy now as service provided will be convenient.
- It will be a good decision for staying up in the competition in the market.