A junior executive is fed up with the operating policies of his boss: Before leaving the office of his angered superior, the young man suggests that a well- trained monkey could handle the trivia assigned to him. Pausing a moment to consider the import of this closing statement, the boss is seized by the thought that must have been in the back of his own mind ever since he hired the baboon. He figures that he could argue strongly to the board that such "capital deepening" is necessary for the cess conscious firm. Two days later, a feasibility duty is completed, and the following date are presented to the president. • It would cost Rs.120000 to purchase and train a reasonably alert monkey with a life of expectancy of 6 years. • The potential savings if the monkey is hired in the coming years would be Rs. 67,312, 48,114, 65,000, 54,564, 73,245, and 72,345. • The monkey will be depreciated on a straight-line basis over 6 years to zero salvage value. • The firm's current cost of capital is estimated to be 11 percent. On the basis of capital budgeting criterion, should the monkey be hired (and the junior executive fired)?
A junior executive is fed up with the operating policies of his boss: Before leaving the office of his angered superior, the young man suggests that a well- trained monkey could handle the trivia assigned to him. Pausing a moment to consider the import of this closing statement, the boss is seized by the thought that must have been in the back of his own mind ever since he hired the baboon. He figures that he could argue strongly to the board that such "capital deepening" is necessary for the cess conscious firm. Two days later, a feasibility duty is completed, and the following date are presented to the president. • It would cost Rs.120000 to purchase and train a reasonably alert monkey with a life of expectancy of 6 years. • The potential savings if the monkey is hired in the coming years would be Rs. 67,312, 48,114, 65,000, 54,564, 73,245, and 72,345. • The monkey will be depreciated on a straight-line basis over 6 years to zero salvage value. • The firm's current cost of capital is estimated to be 11 percent. On the basis of capital budgeting criterion, should the monkey be hired (and the junior executive fired)?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A junior executive is fed up with the operating policies of his boss: Before leaving the office of his angered superior, the young man suggests that a well- trained monkey could handle the trivia assigned to him. Pausing a moment to consider the import of this closing statement, the boss is seized by the thought that must have been in the back of his own mind ever since he hired the baboon. He figures that he could argue strongly to the board that such "capital deepening" is necessary for the cess conscious firm. Two days later, a feasibility duty is completed, and the following date are presented to the president.
• It would cost Rs.120000 to purchase and train a reasonably alert monkey with a life of expectancy of 6 years.
• The potential savings if the monkey is hired in the coming years would be Rs. 67,312, 48,114, 65,000, 54,564, 73,245, and 72,345.
• The monkey will be depreciated on a straight-line basis over 6 years to zero salvage value.
• The firm's current cost of capital is estimated to be 11 percent.
On the basis of capital budgeting criterion, should the monkey be hired (and the junior executive fired)?
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