How much should you expect to pay for the labour

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Reference no: EM13203040

1. You are considering employing manufacturing workers in Japan in 1987. Directly analogous workers for an activity expected to take the same number of hours of work cost $750,000 in USA in 1982. How much should you expect to pay for the labour?

2. A project is estimated in the face of an interest rate of 10%. Find the present equivalent amount for each possible outcome.
What would you investigate to determine whether you should proceed with the project?

 

Optimistic

Most likely

Pessimistic

Investment

$50,000

$58,000

$65,000

Service life

8 years

6 years

4 years

Salvage value

$20,000

$16,000

$10,000

Net annual return

$22,000

$14,000

$10,000

3. The best estimates for an investment are as below. For a range of interest rates from 5% to 25% would your advice concerning whether to proceed with the project change? Why?

Initial investment

$180,000

Estimated life

10 years

Salvage value

$12,000

Net annual return

$45,000

Reference no: EM13203040

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