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Problem 2 Sleep Tight Motel has the opportunity to purchase an adjacent plot of land. Building on this land would increase their capacity from the
Problem 2 Sleep Tight Motel has the opportunity to purchase an adjacent plot of land. Building on this land would increase their capacity from the current sales level of $515,000/year to $600,000/year. Sleep Tight experiences a 20 percent before-tax profit margin. It wishes to estimate the additional before-tax profits that the expansion will produce. (You can copy this table to Excel to make your calculations.) Capacity Requirement (Annual Year Sales) $515,000 2 $517,000 3 $520,000 4 $525,000 5 $540,000 6 $560,000 $565,000 $575,000 9 $600,000 10 $620,000 1 7 8 1. How much more (additional) before-tax cash flow would be realized in year 6 alone due to this expansion? 2. Using the following information, how much more (additional) before-tax cash flow would be realized in year 10 alone due to this expansion? 3. Using the following information, how much more (additional) before-tax cash flow would be realized in the next 10 years due to this expansion
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