MrGrant Is Considering a Capacity Expansion for His Store If Grant Expands His Capacity to $225,000 Now,what Would Be

question 79

Essay

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.
$$\begin{array} { | c | c | } \hline \text { Year } & \begin{array} { c } \text { Annual Sales } \\( \$ 000 )\end{array} \\\hline 1 & 180 \\2 & 210 \\3 & 220 \\4 & 230 \\5 & 260 \\\hline\end{array}$$
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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