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Zippi manufactures motorized scooters in Oakland, California. The company is considering an expansion. The plan calls for a construction cost of $5,200,000. The expansion will
Zippi manufactures motorized scooters in Oakland, California. The company is considering an expansion. The plan calls for a construction cost of $5,200,000. The expansion will generate annual net cash inflows of $675,000 for ten years. Engineers estimate that the new facilities will remain useful for ten years and have no residual value. Management uses a hurdle rate of 10%" on investments of this nature Required: 2.1. Calculate the net present value of the expansion 2.2. Should Zippi go ahead with expansion? Why?
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