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 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?

Step by Step Solution

★★★★★

3.40 Rating (159 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the net present value of the driver safety course we need to find the present value of ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...

1. Hannah is applying for a life policy on her girlfriend Sarahs life. The policy is $500,000 and carries a large premium. Hannah is the main earner, so she is concerned about not being able to pay...

Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...

I require a detailed and comprehensive completion of the attached, so I can utilize it as a study guide. Thank you! Waterways Continuing Problem1 Waterways Continuing Problem (This is a continuation...

Published by CQ Press, an Imprint of SAGE Publications, Inc. www.cqresearcher.com Future of Cars Are Americans ready for self-driving vehicles? C ars that drive themselves, long a staple of science...

Can anyone help me with this or already have the solution this whole Finance Workbook for Madura Personal Finance, Third Edition by Jeff Madura BUILDING YOUR OWN FINANCIAL PLAN WORKBOOK INDEX Chapter...

Here is the Case study and the brief together please do from part 2 to part 5 by reading the case study. P.S don't reat the whole case study its bit lengthy. Just include all the questions asked in...

Case Analysis read the two cases below words :500 The topic of this paper is Operations Management and Value creation: Lessons from cases. Summarize both cases (Roche and Atlantic Animal Hosptial)...

Write a 250-300 word section on governmental structure and size of budget and it interrelationship with the CAFR from the attached Middleton CT CAFR sheet. Comprehensive Annual Financial Report City...

Can you please help me with questions 8 and 9 for Case 6..... I have answers to questions 1-7 if needed... Cases for Management Decision-Making CA-1 Suggested Uses of Cases Case Overview CASE 1 This...

A spool of mass M rests on an inclined plane at a distance D from the bottom. The ends of the spool have radius R, the center has radius r, and the moment of inertia of the spool about its axis is I....

Required Taxpayer's annual gross taxable income Celia Wilson is employed by a building society. She receives a salary of $90,000 per month. She receives three uniforms each year paid for by her

The Sterlings are considering several different uses for their inheritance, including paying off their mortgage, funding their children's education, and saving for retirement. How does the concept of...

Suppose that an agent is in a 3 x 3 maze environment like the one shown in Figure. The agent knows that its initial location is (1, 1), that the goal is at (3, 3), and that the four actions Up, Down,...

The permissible shear stress for the weldment illustrated is 140 MPa. Estimate the load, F, that will cause this stress in the weldment throat. br> 300 Daxenskns

The production-volume variance should always be written off to Cost of Goods Sold. Do you agree? Explain.

Two 6 Ã 4 Ã ½-in. angles are welded together to form the section shown. Determine the moments of inertia and the radii of gyration of the section with respect to the centroidal...

Two solid spheres simultaneously start rolling (from rest) down and incline. One sphere has twice the radius and twice the mass of the other. Which reaches the bottom of the incline first? Which has...

Symbolic interactionists focus on the way we learn the meanings of social concepts through interaction and mass media. After reading about the concept of "greenwashing," let's apply it to a...

What are some of the principal impacts that the Sarbanes-Oxley Act is likely to have on not- for- profit organizations that decide to follow the provision of the law? a. Adequate documentation b....

What is the focus of ABC (activity-based costing)?

How does financial condition analysis differ from financial statement analysis?

A medical research group is investigating what differences might exist between two pain-killing drugs, Azerleive and Zynumbic. The researchers have already established there is no difference between...

Coca-Cola Bottling Co. Consolidated (CCBCC), headquartered in Charlotte, North Carolina, uses quality control techniques to assure that the average amount of Coke in the cans is 12 ounces. It...

Consider testing the hypothesis using samples of respective sizes 6 and 11. Note that we could represent this hypothesis as . The samples yield s2 1 42.2 and s2 2 1.1. It hardly seems worth the...