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Mr Grant Is Considering a Capacity Expansion for His Store

Question 36

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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. 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?
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?

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