Case Scenario:
Sports International limited is planning to expand its business, and for that, it will require four new employees in the organization. For Analysing whether the expansion/improvement is beneficial or not, the management of the company decides to use the cost-benefit analysis. The following are the information available related to benefits and costs related to expansion:
- Within the time frame of one year, it is expected that if the company hires four employees for the expansion, then the revenue of the company will increase by 50 %, i.e., the revenue benefit will be around $ 250,000.
- Also, due to the new hiring, the company value of the business will increase, which would result in additional revenue of $ 30,000.
- The salary of the new employees is estimated to be $ 160,000.
- The additional cost of hiring is estimated to be $ 15,000.
- The cost of additional hardware and software required will come at around $ 25,000
- Analyse the expansion using Cost-benefit analysis.