The

company will finance the construction of the bu

ilding and the purchase

of the equipment by

borrowing $720,000 for 10 years at 10% interest.

Interest will be paid annually and the full

amount of the loan will be repaid

in one payment at the end of the

10 years. The company's net

working capital will increase by $100,000 if the new

production facility is bu

ilt. Operating savings

from the new production facility are expected to

be $300,000 per year for the next 10 years.