QUESTION 1. A company has 2 unit, Thai food and western food production. Initially the company...

 

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QUESTION 1. A company has 2 unit, Thai food and western food production. Initially the company invested around RM30,000 for each unit. The profit obtained from Thai food production was RM5,000 and Western food was RM5,250. The CEO of the company decided to expand the menu for both the unit. The Thai production unit was invested with another RM20,000 and the Western food production was also invested with RM20,000. The estimated revenue is RM100,000 for Thai food and RM110,000 for Western food. The cost of the menu extension was RM60,000 for Thai food and RM 80,000 for Western food. Based on the information given answer the following questions. 1. What are risk involved when the company aims to extend their menu? 2. Assuming the cost of capital is 10%, should the company proceed with the extension of the menu. 3. What are the factors that can lead to underinvestment in the company above? QUESTION 1. A company has 2 unit, Thai food and western food production. Initially the company invested around RM30,000 for each unit. The profit obtained from Thai food production was RM5,000 and Western food was RM5,250. The CEO of the company decided to expand the menu for both the unit. The Thai production unit was invested with another RM20,000 and the Western food production was also invested with RM20,000. The estimated revenue is RM100,000 for Thai food and RM110,000 for Western food. The cost of the menu extension was RM60,000 for Thai food and RM 80,000 for Western food. Based on the information given answer the following questions. 1. What are risk involved when the company aims to extend their menu? 2. Assuming the cost of capital is 10%, should the company proceed with the extension of the menu. 3. What are the factors that can lead to underinvestment in the company above?

Answer rating: 100% (QA)

Question 1 Risks involved in Menu Extension 1 Increased costs Menu development and implementation costs The company will incur additional expenses for recipe development training staff and potentially ... View the full answer