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The WeBuildStuff Company has to make a decision about expanding its production facilities. Research indicates that the desired expansion would require an immediate expense of
The WeBuildStuff Company has to make a decision about expanding its production facilities. Research indicates that the desired expansion would require an immediate expense of $150,000 and a further expense of $50,000 in 5 years. Net returns are estimated to be $15,000 per year for the first 5 years and $25,000 per year for the following 9 years. The company needs to decide if the expansion project be undertaken if the required rate of return is 8% compounded annually. a. Determine the present value of the cash outlays associated with the expansion of WeBuild Stuff's production facilities. b. Determine the present value of the cash inflows associated with the expansion of WeBuildStuff's production facilities. c. Using your answers in parts a and b, determine whether WeBuildStuff should proceed with the expansion of its production facilities
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