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Roche Brothers is considering a capacity expansion of its supermarket. The landowner will build the addi-tion to suit in return for $200,000 upon completion and

Roche Brothers is considering a capacity expansion of its supermarket. The landowner will build the addi-tion to suit in return for $200,000 upon completion and a 5-year lease. The increase in rent for the addition is $10,000 per month. The annual sales projected through year 5 follow. The current effective capacity is equiva-lent to 500,000 customers per year. Assume a 2 percent pretax profit on sales.

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