What is the irr from hiring the consultants

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Question - ABC Corporation is considering hiring a consulting group for one year to develop cost-savings plans, including staffing reductions. The consulting group will cost $1,500,000 in Year 0. Cost reduction expectations per year as a result of the consultants' recommendations are as follows... Year 1 = $250,000, Year 2 = $300,000, Year 3 = $300,000, Year 4 = $350,000, and Year 5 = $350,000. ABC could earn 4% if instead the upfront costs were invested as part of its portfolio.

1) What is the IRR from hiring the consultants?

2) In order for the NPV and IRR to support hiring the consulting group

A. The consultant's fee would have to be reduced by at least $52,472

B. The consultant's fee would have to be reduced by at least $129,693

C. The hurdle rate would have to be increased by at least 1%

D. The hurdle rate would have to be increased by at least 2%

E. None of these is accurate

Reference no: EM132842111

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