Question

Natasha is an entrepreneur who has been running a garment shop for the past ten years. She has saved
5 Lakh from her business. She shared with her family, her desire and to utilize this money to expand her
business. Her family members gave her different suggestions; like buying new machinery to replace the existing
one, acquiring altogether new equipment with the latest technology, opening a new branch in another city and so
on since these decisions are crucial for her business, involve a huge amount of money and are irreversible
except at a huge cost, Natasha wants to analyze all aspects of the decisions, before taking any final decision
() Identify and explain the financial decision to be taken by Natasha.
(ii) Also, explain briefly the factors that will affect this decision.
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Answer 1

Answer:

1. Cost benefit analysis

2. Cost to revenue analysis

3. revenue to profit analysis

4. Rate of return, pre and post expansion

5. Total time to recover the investment cost

Explanation:

1. Cost benefit analysis can be done, in which how much the applied cost, benefits the user.

2. cost revenue analysis is again a part of CB analysis where the proportion of cost to revenue is checked.

3. Revenue to profit or cash analysis is the one wherein how much one earns as total and how much is the profit out of it.

4. Rate of return

what's the rate of return if we put in the amount and before we put in the amount or basic NPV calculation for basics.

5. ARR or actual time to recover

It is the basic time to recover the add-on or the money invested.