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If you had a product that would need to be in your customer’s capital budget decision,...

If you had a product that would need to be in your customer’s capital budget decision, what factors would you use to convince the customer to include your product in their next budget?
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Answer #1

The factors that needed to be considered for the product to be included in the capital budget are:

  • Cash flows expected to be generated from the product
  • Any initial investment required for the product and its quantum
  • Net present value for introducing the product
  • Internal rate of return and whether that is higher the hurdle rate
  • Riskiness of the cash flows

If the Net present value of the product is positive and the internal rate of return generated by introducing the product is higher than MARR, then the product should be introduced.

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