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You manage a software company that requires internet bandwidth to produce output. Currently your company is using 80% of its capacity, but is considering an
You manage a software company that requires internet bandwidth to produce output. Currently your company is using 80% of its capacity, but is considering an expansion to utilize the additional bandwidth. Doing so will require $12,000 in additional expenditures per year forever, and generate $34,000 additional profits each year forever. The expansion will require a one time cost of $100,000. What is the NPV of undertaking this expansion project? Assume a cost of capital of 9.9%.
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