Purchase Solution

role of government in price determination and using DCF methods for determining the financial feasibility

Not what you're looking for?

Ask Custom Question

1) 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 decisions.

2) "It is impossible to use DCF 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 who was asked to justify investment in a major research project based on its expected net present value. How would you respond to this statement? Do you agree or disagree? Explain and include references.

Purchase this Solution

Solution Summary

Government's role in price determination as well as DCF methods for determining the financial feasibility are featured topics.

Solution Preview

These are two separate questions, one requiring you to state the role of government in price determination and the other showing the futility of using DCF methods for determining the financial feasibility of R&D projects.
<br><br>The question makes an assumption that the law has a uniform effect on pricing, this is not substantiated by evidence. For instance, a western Europe country would not have many restrictions on pricing of food. However, a developing country would have serious restrictions on food prices. Similarly, there is an assumption in the question that the returns from R&D cannot be easily be estimated, this may be true in case of pure research which is usually carried out by the governments and is financed by them however in case of companies, which mainly carry out applied research the returns are usually estimable an so can be predicted with a reasonable degree of accuracy.
<br><br>Given below is a template to help you answer the questions.
<br><br>1) Managers should base pricing decisions on ...

Purchase this Solution

Free BrainMass Quizzes
Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.