expected to cost $$7,500,000,$ and the building is expected to have a $14-$year life. Joshua Williams, the company's Chief Executive Officer $($CEO$),$ has asked Lisa to "run the numbers" and come up with a recommendation for approval or rejection of the expansion project to be presented to the company's board of directors. Mr$.$ Williams reminds Lisa that the company must have a rate of return of at least $6\%$ on the investment. After carefully analyzing the numbers, Lisa estimates that the expansion project could produce maximum additional future annual cash flows of $$800,000.$ The present value factors from the Present Value of an Annuity of $$1$ Table for $14$ periods are as follows:

$\backslash$table$[[$Periods$,4\%,5\%,6\%,7\%],[14,10\mathrm{.}5631,9\mathrm{.}8986,9\mathrm{.}2950,8\mathrm{.}7455]]$

REQUIRED:

Calculate the Net Present Value $($NPV$)$ of the expansion project. Assume that the factory building will have no salvage value. Show all of your calculations. $(4$ points possible.$)$

Calculate the Internal Rate of Return $($IRR$)$ for the expansion project. Show all of your calculations. $(4$ points possible.$)$

Based on the results of your NPV and IRR calculations above, should Lisa recommend approval or rejection of the expansion project? Provide explanations for your answer, $(4$ points possible.$)$

Lisa's sister, Paula, has just started up a new construction company that specializes in the construction of commercial buildings. Lisa is extremely eager to see her sister's company get off the ground and become successful. Five years ago, Paula's husband was severely injured during combat while serving with the United States Army, leaving him totally and permanently disabled. Since her husband's injury, Paula has become very involved with the Wounded Warrior Project, serving as Chairman for the charitable organization's local chapter. She is also involved with several other charities in the area that provide food and other necessities for the homeless. Paula has pledged to donate $10\%$ of the net profits from her new construction business to charity. Lisa knows that a $$7,500,000$ construction project like the one being proposed by Alco Manufacturing could be life$-$changing for Paula's new company, her family, and countless individuals impacted by the charitable organizations Paula is involved with. Lisa could easily $($and discreetly$)$ increase the estimated future annual net cash flows for Alco Manufacturing by a small amount $($approximately $$10,000$ per year$),$ thereby changing the results of the calculations supporting a Idifferent recommendation to Alco Manufacturing's board of directors. Explain why Lisa should or should not consider doing this. Your explanation should be at least one paragraph long $($typed$,$ double$-$spaced, preferably in a Word document$)$ and should include adequate reasoning supporting your conclusion after considering all of the circumstances. $(18$ points possible.$)$Manufacturing owns the factory building that houses its operations, but the company's production levels are nearing maximum capacity for the factory building's size. The company is considering expanding and possibly constructing a new larger factory building to house all of its operations. Construction of the new factory building is expected to cost $$7,500,000,$ and the building is expected to have a $14-$year life. Joshua Williams, the company's Chief Executive Officer $($CEO$),$ has asked Lisa to "run the numbers" and come up with a recommendation for approval or rejection of the expansion project to be presented to the company's board of directors. Mr$.$ Williams reminds Lisa that the company must have a rate of return of at least $6\%$ on the investment. After carefully analyzing the numbers, Lisa estimates that the expansion project could produce maximum additional future annual cash flows of $$800,000.$ The present value factors from the Present Value of an Annuity of $$1$ Table for $14$ periods are as follows:

$\backslash$table$[[$Periods$,4\%,,5\%,,6\%$