Homework Help: Corporate Finance

Posted by Linda on Sunday, May 16, 2010 at 9:09pm.

A company wants to build a new factory for increased capacity. Using 3 capital budgeting methods, make a determination about the economic viability of the proposal using the following information.
Building a new factory will increase capacity 30%
Current capacity is $10 million sales with 5% profit margin. The profit margin % is expected to continue.
The factory costs $10 million to build.
The new capacity will meet the needs of the business for 10 years.
The factory will be worth $14 million and will be sold at the end of 10 years.

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