Should the firm undertake the training program

Assignment Help Corporate Finance

Reference no: EM131338238

A company is planning to invest $100,000 (before tax) in a personnel training program. The $100,000 outlay will be charged off as an expense by the firm this year (year 0). The returns from the program in the form of greater productivity and a reduction in employee turnover are estimated as follows (on an after-tax basis):

Year 1-10 $10,000 per year
Year 11-20 $22,000 per year

The company has estimated its cost of capital to be 12 percent. Assume that the entire $100,000 is paid at time 0 (the beginning of the project). The marginal tax rate for the firm is 40 percent. Should the firm undertake the training program? Why or why not?

Reference no: EM131338238

Questions Cloud

Assess the organisations current digital innovation : CIS8011 - assessment item Journal 2 Specifications. Write a report of 800 words to demonstrate your understanding of the implementation aspects of digital innovation in the selected organisation/Business. Your journal should cover following aspects..

Find the downward force : The downward force in newtons equals the mass of the child and the swing in kilograms times the acceleration due to gravity (9.8 meters per second squared). If the mass of the child and the tire is 73 kilograms, find the downward force.

How much can you afford to invest per acre : An acre planted with walnut trees is estimated to be worth $12,000 in 25 years. If you want to realize a 15 percent rate of return on your investment, how much can you afford to invest per acre?

Write an essay on the industry of latin american music in us : Write a short essay on the industry of Latin American music in U.S.Write a short essay on the recent events in addressing, among other points, the vital role played by Missouri football team.Write a critical essay on the role the equal opportunity..

Should the firm undertake the training program : Assume that the entire $100,000 is paid at time 0. The marginal tax rate for the firm is 40 percent. Should the firm undertake the training program? Why or why not?

How common is it for people to try to justify : After reading: "When Is "Everybody's Doing It" a Moral Justification?" in the text, consider "How common is it for people to try to justify their conduct with the argument that "Everybody's doing it"?

Tiltle of assignment using strengths to increase motivation : Tiltle of assignment Using Strengths to Increase Motivation Complete the "What is My Level of PsyCap" self-assessment.

Compute the internal rate of return for each project : Compute the internal rate of return for each project.- Compute the net present value for each project if the firm has a 10 percent cost of capital.

Describe the history of the religion : This is almost complete, Bandar. You need to show the connection between the practices and nature. Allah is the creator of all things. He gives mankind a teaching and a way of life. There is a connection between the nature he has made and the life..

User Account

All Pages