Pricing Decision and Investment Evaluations
Managers should base pricing decisions on both cost and market factors. In addition, they must also consider legal issues. Describe the influence that the law has on pricing decision.
“It is impossible to use DCF (Discounted cash flow) methods for evaluating investments in research and development. There are no cost savings to measure, and we don’t even know what products might come out of our R&D activities.” This is a quote from an R&D manager. How can they justify investing in a major research project based on its expected net present value? Explain how this can be done please, and if you were that manager would you have your resume ready to go out?