Question
Suppose you are the manager of a clothing store in a strip mall. The investment project you are thinking of undertaking is an expansion into
Suppose you are the manager of a clothing store in a strip mall. The investment project you are thinking of undertaking is an expansion into the unit next door, which is presently empty. You will rent the property, but you will need to make an initial investment of $5,000 to purchase additional racks, shelves, etc. on which to display merchandise. You also need to invest $2,000 to acquire additional inventory for the new space. You believe sales will increase by $11,000/yr, but expenses will also increase by $8,000. The corporate tax rate is 18% and the discount rate is 8%. Assume the store expansion operates indefinitely. The CCA rate for shelves is 20%
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