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The WeBuildStuff Company has to make a decision about expanding its production facilities. Research...

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Accounting

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. No revenue is expected during the first year, but then net returns are
estimated to be $25,000 per year for the following 14 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
WeBuildStuff's production facilities.
b. determine the present value of the cash inflows associated with the expansion of WeBuildStuffs production facilities
c. using your answers in parts a and b, determine whether WeBuildStiff should proceed with the expansion of its production facilities
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