Question
Due to safety concerns from Covid19, ChickensRus is needing to implement new safety procedures at its processing plant. The different potential solutions identified include: a)
Due to safety concerns from Covid19, ChickensRus is needing to implement new safety procedures at its processing plant. The different potential solutions identified include:
a) investing $10,000,000 in a reconfiguration of its production line (assume these costs will be incurred immediately) to maintain social distancing of the workers
b) spending $4 million per year for worker protection equipment without social distancing
The corporate office has asked for you to provide an analysis employing capital budgeting criteria and tools. If the expected timeframe is 3 years and the firms cost of capital is 9 percent, which alternative should the firm choose? Why?
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