Mr. Grant is considering a capacity expansion for his store. The annual sales projected for the next five years follow. The current capacity is equivalent to $200,000 sales. Assume a 20 percent pretax profit margin.
If Grant expands his capacity to $225,000 now, what would be the increase in his pretax cash flows for each of the next five years?

Question

Mr. Grant is considering a capacity expansion for his store. The annual sales projected for the next five years follow. The current capacity is equivalent to $200,000 sales. Assume a 20 percent pretax profit margin. 
 If Grant expands his capacity to $225,000 now, what would be the increase in his pretax cash flows for each of the next five years?

Quizplus · Accepted Answer

The Answer of Mr. Grant is considering a capacity expansion for his store. The annual sales projected for the next five years follow. The current capacity is equivalent to $200,000 sales. Assume a 20 percent pretax profit margin. 
 If Grant expands his capacity to $225,000 now, what would be the increase in his pretax cash flows for each of the next five years?

Mr Grant Is Considering a Capacity Expansion for His Store