2024 Sanders Enterprises, Inc., Has Been Considering The Purchase Of A New Manufacturing Facility For $270,000. The Facility Is To Be… Assignment Help
Sanders Enterprises Inc has been considering the purchase of a new manufacturing facility for 270 000 The 2023
Sanders Enterprises, Inc., has been considering the purchase of a new manufacturing facility for $270,000. The facility is to be fully depreciated on a straight-line basis over seven years. It is expected to have no resale value after the seven years. Operating revenues from the facility are expected to be $105,000, in nominal terms, at the end of the first year. The revenues are expected to increase at the inflation rate of 5 percent. Production costs at the end of the first year will be $30,000, in nominal terms, and they are expected to increase at 6 percent per year. The real discount rate is 8 percent. The corporate tax rate is 34 percent. Sandershas other ongoing profitable operations. Should the company accept the project?