Compute the Payback Period, Net Present Value and Internal Rate of Return for each of the three investment options.  Submit the recommendation as a one-page Word document along with an Excel file showing your work as partial credit will be rewarded.  My recommendation is to read the description of each option to determine relevant costs and benefits (those that change based on whether you undertake the project or not).  Do not consider costs that are incurred regardless of your decision or costs that occurred in the past (sunk costs).  Add the relevant costs to the yearly cash flows provided.  Explain your reasoning so that I may award you partial credit and offer better feedback.

On page 406 of the text, read the case entitled Coker v. Pershad. The Appellate Division of the Superior Court of New Jersey lays out the reasoning that AAA had no control over the independent contractor’s work and thus Pershad was an employee of Five Star but Five Star (and by extension, Pershad) were independent contractors to AAA.

This type of arrangement is not uncommon. Neither are situations where trucking companies (among others) employ individuals who are designated as independent contractors but are trained by the company and have a manual of regulations provided to them which, in essence, controls where they drive, how they drive, how long their breaks are and who can ride in the cab of the truck. They often wear a company uniform. The artifice of calling someone an independent contractor when they actually are not is no more than an effort to avoid liability for the person’s actions on the job. Consequently, the situations must be carefully examined on a case-by-case basis to discern the actual status of the individual.

Do you agree with the decision of the New Jersey court? Is there a better way to discern who is an employee and who is an independent contractor? (If it walks like a duck and talks like a duck, it’s a duck?”) Are companies attempting to avoid liability for employees by call them contractors?