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1. A business idea requires to spend $125,000 on training the staff this year and will save $8,000 a every year afterwards (because the staff
1. A business idea requires to spend $125,000 on training the staff this year and will save $8,000 a every year afterwards (because the staff is more productive), forever. a. Will the firm implement the idea if the interest rate is 5%? Explain. (2) b. Will the firm implement the idea if the interest rate is 8%? Explain. (1) c. At what interest rate is the firm indifferent between implementing the idea and abandoning it? Explain. (3)
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