G-III Apparel Is Considering Increasing the Size of a Warehouse

question 26

Multiple Choice

G-III Apparel is considering increasing the size of a warehouse. The cost of the expansion is $825,000, and the increase in inventories and accounts payable will be $410,000 and $360,000, respectively. G-III expects that the expansion will increase net cash flows by $150,000 a year for the next 5 years and $200,000 a year for years 6-12. G-III has a 14% cost of capital and a marginal tax rate of 35%. What is the NPV of the warehouse expansion?

• A) -$3,450
• B) $60,050
• C) $10,050
• D) -$338,570

---

Definitions:

Descriptive Statistics

Statistical techniques that describe or summarize a set of data, including measures of central tendency and measures of variability.

COUNTIF(range,criteria)

A function in spreadsheet software that counts the number of cells within a range that meet a specified condition.

Specified Criteria

Pre-determined standards or conditions that must be met or complied with.