Question

Your company, "when life gives you lemons inc.", is thinking about expanding the number of stands that it currently has from 15 to 20. it will cost $200,000 today to complete the expansion. the expansion will permanently increase profits by $15,000 every year starting in one year's time. if the interest rate is 8% what is the pdv of the expansion project. should the company do it?

Answer 1

No. The company will probably go bankrupt.