Managerial Economics 2nd Edition by William Boyes

Exercise 12

The marketing director of National Midland Mortgage has been arguing with senior management about building a $50 million publishing facility. Other managers worried about the assumptions in the analysis that support the investment-an increase in the number of mortgages processed and a reduction in processing costs. What if the mortgage market did not grow as expected?
a. Should National Midland invest in the publishing facility?
b. What assumptions might the marketing director have made to make the investment look worthwhile?