Our client is a non profit considering investment in a new technology to prevent malaria in Africa. Should they invest in this new technology given the following information:
Every year malaria costs $100M to African Economy.
Current means used to prevent malaria 1: Mosquito nets- Annual Savings- $10 M, Annual Cost- $12M.
Current means used to prevent malaria 2: Mosquito spray- Annual savings- $15M, Annual cost $20M.
New Technology: Annual Savings- Don't Know, Annual Cost- $15M, One time setup cost- $25M.
Should our client invest in this new technology?
But in all the options, the client is losing money. How to account for that?
Hi Aditya, in the last case it is not sure the client may lose money; even if that is the case, being a no-profit there may be other revenue channels (eg donations) that could support the company in the long term, while the goal of the projects may be different, as for point 1. above. Hope this helps