Toyota Canada expected the capital expansion of its Cambridge, Ontario facility to total $680 million (CDN). The

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Toyota Canada expected the capital expansion of its Cambridge, Ontario facility to total $680 million (CDN). The plant began production of 60,000 Lexus RX300 (which have since been renamed RX330 and RX350) luxury SUVs annually in September 2003. Information on Toyota Canada’s plans for further expansion of Lexus production can be found at media.toyota.ca/pr/tci/ en/lexus/toyota-to-expand-lexus-production-236830.aspx. Assuming profit of $5,000 on the Lexus, a 15-year production horizon, and a 15 percent discount rate, do you think Toyota made a good investment decision? What other factors need to be considered? Why?

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Fundamentals of Corporate Finance

ISBN: 978-0071051606

8th Canadian Edition

Authors: Stephen A. Ross, Randolph W. Westerfield

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