Companies considering new cost-cutting manufacturing
processes often compare the projected results of making
the investment against the alternative of not making the
investment with costs, selling prices, and share of
market remaining constant.
Which of the following, assuming that each is a realistic
possibility, constitutes the most serious disadvantage for
companies of using the method above for evaluating the
financial benefit of new manufacturing processes?
(A) The costs of materials required by the new process
might not be known with certainty.
(B) In several years interest rates might go down,
reducing the interest costs of borrowing money to
pay for the investment.
(C) Some cost-cutting processes might require such
expensive investments that there would be no net
gain for many years, until the investment was paid
for by savings in the manufacturing process.
(D) Competitors that do invest in a new process might
reduce their selling prices and thus take market share
away from companies that do not.
(E) The period of year chosen for averaging out the cost
of the investment might be somewhat longer or
shorter, thus affecting the result.
Please help with this.