What Is Cost/Benefit Analysis?

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The safest way to double your money is to fold it over once and put it in your pocket.

—Frank McKinney Hubbard

A MALGAMATED RAT HACK is considering two investment options: buying a new piece of machinery and creating a new product line. The new machine is a plastic extruder costing $100,000. Amalgamated hopes it will save time and money over the long term, in addition to being safer than the current machinery. The second option, launching a line of coatracks, will require a $250,000 investment in plant, equipment, and design.

How does Amalgamated decide whether these investment options make economic sense?

The ...

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