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A recently hired chief executive officer wants to reduce future production costs to improve the companys earnings, thereby increasing the value of the companys stock. The plan is to invest $78,000 now and $60,000 in each of the next 5 years to improve productivity. By how much must annual costs decrease in years 6 through 14 to recover the investment plus a return of 8% per year? The annual cost decreases by $

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4 The present value of cost is Return required Present value 8% 3,17,562.60 The annual cost decrease shall be such that it present value shall equal to present value of cost 10 nnual cost decrease Present value 74693.78 317562.6 12 13 14 15 16 17 182 4 The present value of cost is Return required Present value 0.08 PV(D6,5,60000)+78000 9 The annual cost decrease shall be such that it present valu 10 nnual cost decrease 74693.7756815958 Present value -Py(D63,D11)/(1+8%/5 12 13 14

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