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When Edward first pitched a newproduct idea to his manager, it was very well received because he did such a thorough job of researching and
When Edward first pitched a newproduct idea to his manager, it was very well received because he did such a thorough job of researching and analyzing it. He presented a comprehensive forecast that included both possible and probable levels of returns to be earned from this investment. As a result, the company handed over the money and put Edward in charge of the project. The company planned to evaluate the investment based on his "probable" forecast. One year into the project, money started getting tight in other divisions of the company. Pressure was on for Edward to provide some proof that this 3-year imvestment was starting to work. As of the end of that first year, $12,000 in operating costs and $12,000 in new operating cash inflows (both reflect after-tax amounts) had been realized. Edward had collected the following information but clearly still only had projections for the remaining 2 years of this project: (c) Should the company change course at this point in the project? Explain your position
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