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

Multiple Choice

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