Statements with regard to potential investment

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Reference no: EM131962362

A CFO puts forward the following statements with regard to a potential investment. Are they right or wrong? and why ?

- Statement 1

Due to the decline in our production, thirty workers would have to be redundant in the coming years. If we decide to include the new product in our product range, we can retain at least 15 workers and possibly even more. This is a windfall and saves us the additional labor costs, because those workers are already employed.

- Statement 2

The impact of the expansion of our product range on the current product range is not yet entirely clear. Now this is a trivial problem since the possible shift of sales will take place within the same company . We can therefore ignore it for our investment analysis.

Reference no: EM131962362

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