Evaluation of Proposed Expansion You are a small business owner and you have the opportunity to expand your facility, which will increase your production capacity over the next 5 years. The expansion will cost $60,000 and additional equipment will cost another $20,000. Required:
Additional profits after tax will amount to $18,000 per year. Your cost of capital is 8%. Should you go ahead with the expansion? Why or why not? HINT: Use NPV.