Company XYZ has appraised a project with an expected life of six years using NPV and has calculated the project has a negative NPV of $8,500. Few of the costs are controllable however the production...

Company XYZ has appraised a project with an expected life of six years using NPV and has calculated the project has a negative NPV of $8,500. Few of the costs are controllable however the production director thinks that labour costs could be reduced. Labour currently costs $25,000 annually and XYZ’s cost of capital is 15%.

Calculate to four decimal places what percentage the labour costs must be reduced in order to make the project earn the 15% cost of capital.