Question: Pottier Transportation is trying to decide whether to require its drivers to take a driver safety course. The firm has 100 drivers and the cost

Pottier Transportation is trying to decide whether to require its drivers

Pottier Transportation is trying to decide whether to require its drivers to take a driver safety course. The firm has 100 drivers and the cost of the course per driver is $1500, which includes the cost to the firm of people not working. If all 100 drivers take the course immediately, the insurance company will reduce the firm's auto insurance premium by $80000 immediately, and by $45000 in each of the next two years. In the managers' view, the only benefit of the course is a reduction in insurance premiums. The firm's chief financial officer says that the appropriate cost of capital is 7%. What is the net present value for the course? $81361. $90000. $42056. $39305. $11361

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