Solution-Payroll administration to an outside company

Payroll administration to an outside company

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Reference no: EM131105207

Your company currently has a payroll department, but it is considering outsourcing the payroll administration to an outside company. Last month you paid a consultation fee to the outside payroll company of $5,000. If you agree to hire their services, you will pay a service fee of $15,000 at the start of their service, and utilities and audit fees will be unaffected. During the 5 year contract, you save $75K per year in payroll department salaries. Office utilities cost $10K per year, and legal fees cost $5K per year. The yearly payroll fee is $65K per year for the 5 year contract. Calculate the IRR of this project. If the cost of capital for this project is 10%, should the company undertake the project?

Reference no: EM131105207

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Payroll administration to an outside company

Reference no: EM131105207

Reference no: EM131105207

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