Question
Davidson Consulting believes that they can help your company reduce production costs in exchange for a one-time fee. You estimate that, if you hire the
Davidson Consulting believes that they can help your company reduce production costs in exchange for a one-time fee. You estimate that, if you hire the consulting firm, the after-tax savings will be $1.87 million at the end of the first year, and these savings will grow at a rate of 1 percent per year indefinitely. Your company estimates the cost of capital on this project as 12 percent. |
What is the most that you would pay Davidson Consulting for this project? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole dollar amount.) |
Maximum cost | $ |
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