Suppose You Are Looking to Add More Capacity to Your

Multiple Choice

Suppose you are looking to add more capacity to your current manufacturing plant.The new project will cost $6 million up front and is projected to increase revenue $1.5 million a year for each of the next 5 years.If the interest rate is 8%,what is this project's NPV and is it a profitable investment?

A) $10,935; yes it is profitable
B) -$10,935; no it is not profitable
C) $944,444; yes it is profitable
D) -$944,444; no it is not profitable