China Importers would like to spend $215,000 to expand its warehouse.However, the company has a loan outstanding that must be repaid in 2.5 years and thus will need the $215,000 at that time.The warehouse expansion project is expected to increase the cash inflows by $60,000 in the first year, $140,000 in the second year, and $150,000 a year for the following 2 years.Should the firm expand at this time? Why or why not?
A)Yes; because the money will be recovered in 1.69 years
B)Yes; because the money will be recovered in 1.87 years
C)Yes; because the money will be recovered in 2.10 years
D)No; because the project never pays back
E)No; because the money will not be recovered in time to repay the loan

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The Answer of China Importers would like to spend $215,000 to expand its warehouse.However, the company has a loan outstanding that must be repaid in 2.5 years and thus will need the $215,000 at that time.The warehouse expansion project is expected to increase the cash inflows by $60,000 in the first year, $140,000 in the second year, and $150,000 a year for the following 2 years.Should the firm expand at this time? Why or why not?
A)Yes; because the money will be recovered in 1.69 years
B)Yes; because the money will be recovered in 1.87 years
C)Yes; because the money will be recovered in 2.10 years
D)No; because the project never pays back
E)No; because the money will not be recovered in time to repay the loan

China Importers Would Like to Spend $215,000 to Expand Its