Students should review the following statements and write 3-4 paragraphs that provide support for your answers:
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.
"It is impossible to use Discounted Cash Flow 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.
Recommendations for Responding to Peer Posts
Compare the points made about the influence of the law on pricing decisions to your own. How were they similar or different?
Review a peer's post that was different from your own regarding the use of Discounted Cash Flow methods. Did any of the points he or she made make you reconsider your position as to which costing method would be best?
If so, what points made you change your mind?
If not, what additional arguments can you make that would directly refute the points that he or she made.