Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Pottier Transportation is trying to decide whether to require its drivers to take a driver safety course. The firm has 100 drivers and the cost
Pottier Transportation is trying to decide whether to require its drivers to take a driver safety course. The firm has 100 drivers and the cost of the course per driver is $1500, which includes the cost to the firm of people not working. If all 100 drivers take the course immediately, the insurance company will reduce the firm's auto insurance premium by $80000 immediately, and by $45000 in each of the next two years. In the managers' view, the only benefit of the course is a reduction in insurance premiums. The firm's chief financial officer says that the appropriate cost of capital is 7%. What is the net present value for the course? $81361. $90000. $42056. $39305. $11361
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started