A restaurant has a capacity of 95,000 meals per year in 2018 and it is operating at 100 percent capacity.
The demands for 2019, 2020, 2021, 2022, and 2023 are forecasted to be 105,000 meals, 115,000 meals, 125,000 meals, 135,000 meals, and 145,000 meals, respectively.
The owner of the restaurant is planning to expand the capacity of the restaurant in two stages.
The restaurant will have the capacity of 115,000 meals in 2019 and 2020. The cost of expansion will be $120,000 and this cost will be charged at the beginning of 2019.
The restaurant will have the capacity of 145,000 meals in 2021, 2022, and 2023. The cost of the second expansion will be $180,000 at the beginning of 2021.
Assumed that the restaurant has a constant yearly fixed cost of $200,000 in the next five years. Furthermore, the unit profit margin will be constant at $6 per meals in the next five year.
What are the yearly pretax cash flows from this expansion project?