Summary: Cost Benefit Analysis

845 Words 4 Pages
A question business owners will repeatedly answer as their business grow and develop is, “Should a product or service be added to their offerings?” Before undertaking any project the true profitability of the product or service must be calculated. If the benefits outweigh the cost then the owner must decide how to finance the addition. This paper will evaluate three article relating to obtaining loans in the areas of credit worthiness (Henning, 2016) cost benefit analysis-(Rudegeair, 2016) and industry lending- (Wilson & Durisin, 2016).The three articles reviewed relate to the real cost of business financing and the ability to obtain loans. For small businesses and entrepreneurs obtaining capital to operate a business may require obtaining …show more content…
The main theme of the article is being an informed borrower. A method of determining if a loan is worth the total cost is conducting a cost benefit analysis. A cost benefit analysis puts a dollar amount on intangible goods. The implementation of a new lending SMART new ideas or information were communicated in the articles According to Rudegeair, (2016), “SMART (Straightforward Metrics Around Rate and Total cost) Box™, a first-of-its-kind model pricing disclosure and comparison tool focused on empowering small businesses to better assess and compare finance options.” The SMART Box tool will allow business to make an informed decision when adding projects and obtaining loans. For example, using SMART BOX business owners can compare loan rates and explore scenarios such as how a prepayment penalty will affect the total repayment amount. In addition owners are able to set metrics and …show more content…
Each article provided guidelines or industry standards either to inform business owners or entrepreneurs the importance of conducting research before obtaining a loan or understanding the industry in which the business is in. In contrast the article written by Wilson & Durisin, seemed to be written from the lenders prospective. It did not offer a solution to obtaining financing in a industry with a high personage of loan defaults. Although I feel the conclusion in all three articles are valid. The article I most agree with is Rudegeair, (2016), the use of SMART can prevent owners from inuring debt beyond their assets. The information contained in the article is useful to me as a student as it helped me gain a greater understanding of the course material. I can apply what I learned in my workplace by acting ethically and not been influenced to commit fraud and speak up when I feel my employer is making a poor financial decision that may hurt the business or cause me to lose my

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