{"id":841,"date":"2020-05-25T15:18:04","date_gmt":"2020-05-25T19:18:04","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/?post_type=chapter&p=841"},"modified":"2021-06-24T16:38:15","modified_gmt":"2021-06-24T20:38:15","slug":"cost-comparisons","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/businessmathematics\/chapter\/cost-comparisons\/","title":{"raw":"6.8 Cost Comparisons","rendered":"6.8 Cost Comparisons"},"content":{"raw":"All of the methods presented in this chapter try to answer the question:\u00a0 Should we invest?\r\n\r\nIf there was a clear answer to this question that we could teach you, the world of business would be much simpler.\u00a0 Every time we need to make a decision, we will have ot evaluate the criteria given here, as well as looking at the risks and rewards.\u00a0 The concept of risk will be covered more thoroughly in Business Statistics.\r\n\r\nHere are the tools we have covered:\r\n
    \r\n \t
  1. PROFIT (Revenue - Costs) - if we do not end up with a profit, than it is useless to evaluate the NPV or IRR.<\/li>\r\n \t
  2. PAYBACK: How long until we get our original investment back?\u00a0 When we choose, a shorter payback is preferred.<\/li>\r\n \t
  3. NET PRESENT VALUE (NPV):\u00a0 When we evaluate the Profit with interest, is it positive?<\/li>\r\n \t
  4. INTERNAL RATE OF RETURN (IRR): What is our actual rate of return?<\/li>\r\n<\/ol>\r\n

    Your Own Notes<\/h2>\r\n
      \r\n \t
    • Are there any notes you want to take from this section? Is there anything you'd like to copy and paste below?<\/li>\r\n \t
    • These notes are for you only (they will not be stored anywhere)<\/li>\r\n \t
    • Make sure to download them at the end to use as a reference<\/li>\r\n<\/ul>\r\n[h5p id=\"1\"]","rendered":"

      All of the methods presented in this chapter try to answer the question:\u00a0 Should we invest?<\/p>\n

      If there was a clear answer to this question that we could teach you, the world of business would be much simpler.\u00a0 Every time we need to make a decision, we will have ot evaluate the criteria given here, as well as looking at the risks and rewards.\u00a0 The concept of risk will be covered more thoroughly in Business Statistics.<\/p>\n

      Here are the tools we have covered:<\/p>\n

        \n
      1. PROFIT (Revenue – Costs) – if we do not end up with a profit, than it is useless to evaluate the NPV or IRR.<\/li>\n
      2. PAYBACK: How long until we get our original investment back?\u00a0 When we choose, a shorter payback is preferred.<\/li>\n
      3. NET PRESENT VALUE (NPV):\u00a0 When we evaluate the Profit with interest, is it positive?<\/li>\n
      4. INTERNAL RATE OF RETURN (IRR): What is our actual rate of return?<\/li>\n<\/ol>\n

        Your Own Notes<\/h2>\n
          \n
        • Are there any notes you want to take from this section? Is there anything you’d like to copy and paste below?<\/li>\n
        • These notes are for you only (they will not be stored anywhere)<\/li>\n
        • Make sure to download them at the end to use as a reference<\/li>\n<\/ul>\n
          \n