2.1 Critically discuss how profitability is suitable as a measure of cost effectiveness in the short-term...

 

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2.1 Critically discuss how "profitability is suitable as a measure of cost effectiveness in the short-term 2.2 If your company chose to invest in any of the following two projects, which would you (10) choose from the perspective of profitability? Project A requires an initial investment of R200,000, with net cashflows of Year 1 = R60,000; Year 2= R70,000; Year 3 R80,000 Project B requires an initial investment of R200,000, with net cashflows of Year 1 = R40.000; Year 2- R60,000, Year 3 = R90,000. The firm's cost of funds is 10% Calculate the profitability of both projects and justify your selection. 2.3 For the sake of pursuing cost effectiveness, suppose you were negotiating very aggressively with your supplier to secure the largest possible discount. Explain: a) the factors other than price that you would also consider: (03) and (05) b) why over-aggressive negotiations may possibly end up having unintended negative consequences for your own business. (02) (05) The firm's cost of funds is 10% Calculate the profitability of both projects and justify your selection. 2.3 For the sake of pursuing cost effectiveness, suppose you were negotiating very aggressively with your supplier to secure the largest possible discount. Explain: a) the factors other than price that you would also consider; (03) and b) why over-aggressive negotiations may possibly end up having unintended negative consequences for your own business. (02) (C 2.1 Critically discuss how "profitability is suitable as a measure of cost effectiveness in the short-term 2.2 If your company chose to invest in any of the following two projects, which would you (10) choose from the perspective of profitability? Project A requires an initial investment of R200,000, with net cashflows of Year 1 = R60,000; Year 2= R70,000; Year 3 R80,000 Project B requires an initial investment of R200,000, with net cashflows of Year 1 = R40.000; Year 2- R60,000, Year 3 = R90,000. The firm's cost of funds is 10% Calculate the profitability of both projects and justify your selection. 2.3 For the sake of pursuing cost effectiveness, suppose you were negotiating very aggressively with your supplier to secure the largest possible discount. Explain: a) the factors other than price that you would also consider: (03) and (05) b) why over-aggressive negotiations may possibly end up having unintended negative consequences for your own business. (02) (05) The firm's cost of funds is 10% Calculate the profitability of both projects and justify your selection. 2.3 For the sake of pursuing cost effectiveness, suppose you were negotiating very aggressively with your supplier to secure the largest possible discount. Explain: a) the factors other than price that you would also consider; (03) and b) why over-aggressive negotiations may possibly end up having unintended negative consequences for your own business. (02) (C

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2 Profitability and Project Selection 21 Suitability of Profitability in ShortTerm CostEffectiveness Profitabilitywhile a popular measurehas limitatio... View the full answer