Darlington Limited is considering implementing a new online employee recognition system that will allow employees to...
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Darlington Limited is considering implementing a new online employee recognition system that will allow employees to recognize their peers for "going above and beyond" in helping the company achieve its goals. Employees who receive recognition from their peers using the new system will be eligible for small financial rewards. The new system has an up-front cost of $50,000 with the recognition awards expected to cost about $5,000 per year. The consulting firm that will help implement the new system has told management at Darlington Limited that it will likely generate significant cost savings vis-a-vis reduced turnover as the result of more engaged employees. Management plans to use the new system for a trial period of 5 years. Required: Ignore income taxes. What annual cost savings related to reduced employee turnover will Darlington Limited need to achieve to generate an internal rate of return of 10% on the new system? (Hint: Use Microsoft Excel to calculate the discount factor(s).) Annual cost savings Darlington Limited is considering implementing a new online employee recognition system that will allow employees to recognize their peers for "going above and beyond" in helping the company achieve its goals. Employees who receive recognition from their peers using the new system will be eligible for small financial rewards. The new system has an up-front cost of $50,000 with the recognition awards expected to cost about $5,000 per year. The consulting firm that will help implement the new system has told management at Darlington Limited that it will likely generate significant cost savings vis-a-vis reduced turnover as the result of more engaged employees. Management plans to use the new system for a trial period of 5 years. Required: Ignore income taxes. What annual cost savings related to reduced employee turnover will Darlington Limited need to achieve to generate an internal rate of return of 10% on the new system? (Hint: Use Microsoft Excel to calculate the discount factor(s).) Annual cost savings
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Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0131495388
12th edition
Authors: Charles T. Horngren, Srikant M. Datar, George Foster
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