1. Leslie Bright was excited when she found out that she was the successful bidder on a $1,000,000 contract with the Filbert Technology Company to provide diversity training to 6,000 employees. The contract extends for 7 years and Leslie will be paid $150,000 yearly to provide expert instructions and facilitators periodically throughout the seven years. Because the company will

 

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1. Leslie Bright was excited when she found out that she was the successful bidder on a $1,000,000 contract with the Filbert Technology Company to provide diversity training to 6,000 employees. The contract extends for 7 years and Leslie will be paid $150,000 yearly to provide expert instructions and facilitators periodically throughout the seven years. Because the company will pay the facilitators and instructors directly in addition to the contract price, Leslie only has to pay for the development of the course. Her development costs, she believes will be $400,000 and will be incurred immediately before any training may begin. Leslie's corporate rate of return is 10 per cent. Required a. What is Leslie's payback period? What is the present value of Leslie's contract? What is the internal rate of return? b. Should Leslie sign the contract or consider other opportunities? Support your answer.

Expert Answer

(a) Payback period: Year Cash flow Cumulative cash flow 0 -400,000.00 -400,000.00 1 150,000.00 -250, View the full answer