Improvement be worth?

label Statistics
account_circle Unassigned
schedule 1 Day
account_balance_wallet $5

The cost of improving office layout is 27,000 to be treated as a one time expense.  the office manager says that the new layout will save time and miles of walking for the 40 office employees.  she estimates that the new layout will cut the amount of walking for the average employee by 100 miles per year.  how much will the layout improvements be worth? 

Mar 29th, 2015

assume that the average walking speed of an employee is 3 mph, then 100 mile a year translates to 33.3 hrs per year, assume that average hourly rate for an employee is 30$, that translate to  1000$/year for an employee and total of 1000*40 = 40000$/year.  Assume that the require return for the investment is 10%, and the present value for the cash saving is 40000*1/0.1 = 400,000$, the worth of the improvement is thus 

400,000-27,000 = 373, 000$     


Mar 29th, 2015

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
Mar 29th, 2015
...
Mar 29th, 2015
Sep 24th, 2017
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer