EMG_344-3_AEVA_Lecture-7

EMG_344-3_AEVA_Lecture-7 - Production and Technological...

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Production and Technological Change Recommended Texts: Petersen H. C. and Lewis W. C. (1999), Managerial Economics, Prentice hall of India, Delhi Nicholson W.E. (1997), Intermediate Microeconomics and Its Application, The Dryden Press, United States World Development Forum , (various issues), Global Competitiveness Report http://www.gcr.weforum.org/ Ferri F., S Treadwell and M.A. Desai (2005), Understanding Economic Value Added, Harvard Business Publications
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Adopting a New Product/Process A significant initial cost Stream of future profits Capital budgeting Present value of future profit and present cost Product innovation Process innovation
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Present Value Time is T Production Q kilowatts No inflation OC E > OC N Present value ( 29 = + = T i t E E r OC Q PVOC 1 1 ( 29 = + = T i t N N r OC Q PVOC 1 1
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Decision Present value of cost saving If Initial cost is IC and Salvage Value is SV
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EMG_344-3_AEVA_Lecture-7 - Production and Technological...

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