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3) Capital Budgeting - Effects of Events (20 pts) You are analysing a number of capital budgeting decisions design to reduce labor costs or increase

3) Capital Budgeting - Effects of Events (20 pts)
You are analysing a number of capital budgeting decisions design to reduce labor costs or
increase output of your products. How will each of the following events affect the evaluation?
That is, will it make more attractive, less attractive or have no effect? Consider each event
independently. Justify your answer.
a) Your company signs a new contract, with its union calling for a significant increase in
b) salary rates?
c) Your chief competitor announces that, it will decrease the selling price of its products.
The entry of new product will slow the sales-growth rate of one of your major products.

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