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Pretoria Corporation manufactures bicycles and is headquartered in Edmonton. At present, all of its production also takes place in Edmonton. To serve the needs of

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Pretoria Corporation manufactures bicycles and is headquartered in Edmonton. At present, all of its production also takes place in Edmonton. To serve the needs of bicycle customers in eastern Canada, the company is thinking about opening a factory in Edmundston for a period of 12 years. Pretoria Corporation engaged with Deloitte for a $50,000 fee to act as a consultant for this potential project. Deloitte has determined that yearly cash inflows are going to be $250,000 for the period. Yearly cash outflows will be $130,000 for the period. This outfiow amount includes rent, which is $10,000 each year for the period. Machinery and furnishings are estimated to cost $400,000; however, at the end of 12 years, they can be sold for 5% of their initial cost. Further, $100,000 would be required for inventories. Pretoria Corporation will pay the City of Edmundston $10,000 yearly for the first 10 years as part of a municipal rejuvenation program. The company uses a discount rate of 18%. Required: Based on this information, will Deloitte advise Pretoria Corporation to pursue the factory in Edmundston based on the NPV method

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