Critical Reasoning

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.

Why not [spoiler]C?[/spoiler]
OA is D

IMO A

IMO-D
C cannot be the ans because -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.
Even if you do not understand what this is saying , the words marked in red raise red flags.
Anyways,this options talks less about investment than it talks about efficient operations and cost cutting . So this does not hit the argument .

Hi Cans
pls recheck your answer.

Cheers!

Really don't understand what is the point you are trying to highlight here.....

akshatmikku wrote:IMO-D
C cannot be the ans because -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.
Even if you do not understand what this is saying , the words marked in red raise red flags.
Anyways,this options talks less about investment than it talks about efficient operations and cost cutting . So this does not hit the argument .

IMO D
In layman's term:
new cost-cutting manufacturing processes are against processes that focus on investment with costs, selling prices, and share of market remaining constant.

We need to find loop hole in the new 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.

D says : if companies/competitors that use this new method loose their market share -->i.e share of market WOULD NOT remain constant --->something bad for the company.

IMO - D