Price Mart Is Considering Outsourcing Its Billing Operations

question 55

Essay

Price Mart is considering outsourcing its billing operations.A consultant estimates that outsourcing should result in after-tax cash savings of $9,000 the first year,$15,000 for the next two years,and $18,000 for the next two years.Interest is at 12%.Assume cash flows occur at the end of the year.
Required: Calculate the total present value of the cash flows.

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Definitions:

Mastery Motivation

An intrinsic drive to achieve proficiency or control over a task or skill through persistent effort.

Helpless Orientation

An orientation in which one seems trapped by the experience of difficulty and attributes one’s difficulty to a lack of ability.

Challenging Circumstances

Situations that pose difficulties or obstacles that require effort and adaptation to overcome.

Performance Orientation

An orientation in which one focuses on winning rather than achievement outcomes, and happiness is thought to result from winning.