Davidson Consulting believes that they can help your company reduce production costs in exchange for a one-time fee. You estimate that, if you hire the consulting firm, the cost savings will be $1.86 million after-taxes at the end of the first year, and these cost savings will grow at a rate of 2.00 percent per year indefinitely. Your company estimates the cost of capital on this project as 12.40 percent.

What is the most that you would pay Davidson Consulting for this project?

Answer rating: 100% (QA)

To answer this question we have to calculate the present value of an infinite seri... View the full answer