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Due to safety concerns from Covid19, ChickensRus is needing to implement new safety procedures at it’s...

Due to safety concerns from Covid19, ChickensRus is needing to implement new safety procedures at it’s processing plant. The different potential solutions identified include:

  1. investing $10,000,000 in a reconfiguration of it’s production line (assume these costs will be incurred immediately) to maintain social distancing of the workers
  2. spending $4 million per year for worker protection equipment without social distancing

The corporate office has asked for you to provide an analysis employing capital budgeting criteria and tools. If the expected timeframe is 3 years and the firm’s cost of capital is 9 percent, which alternative should the firm choose? Why?

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jeff jeffy answered 1 year ago
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