MidAtlantic Manufacturing (MAM) designs, manuftactures, sells, and distributes ovens and parts to restaurants. Sales in the...

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MidAtlantic Manufacturing (MAM) designs, manuftactures, sells, and distributes ovens and parts to restaurants. Sales in the last two years have been depressed due to COVID. Now MAM's management, anticipating a recovery in the restaurant industry wants to upgrade their Edison, New Jersey warehouse and expand their fleet of delivery trucks and customer service vehicles The investment would reduce shipping costs and allow MAM to expand into New York State, a new market for MAM Year O spending for this project would be $2,650,000 with Upgrading Warchouse and Vehicle Expansion Year Expected Cash Flow $425,000 $515,000 $675,000 S790,000 $865,000 $915.000 $945,000 $955,000 Approximately 1/3 of the expected cash flow would come from cost savings and 2/3 from additional sales in New York State, a new market for MAM. () MAM's Chief Financial Officer (CFO) has decided to use a 15% required rate of retum to evaluate this project What factors might have gone into her decision? Ti) Should MAM consider making this investment? MidAtlantic Manufacturing (MAM) designs, manuftactures, sells, and distributes ovens and parts to restaurants. Sales in the last two years have been depressed due to COVID. Now MAM's management, anticipating a recovery in the restaurant industry wants to upgrade their Edison, New Jersey warehouse and expand their fleet of delivery trucks and customer service vehicles The investment would reduce shipping costs and allow MAM to expand into New York State, a new market for MAM Year O spending for this project would be $2,650,000 with Upgrading Warchouse and Vehicle Expansion Year Expected Cash Flow $425,000 $515,000 $675,000 S790,000 $865,000 $915.000 $945,000 $955,000 Approximately 1/3 of the expected cash flow would come from cost savings and 2/3 from additional sales in New York State, a new market for MAM. () MAM's Chief Financial Officer (CFO) has decided to use a 15% required rate of retum to evaluate this project What factors might have gone into her decision? Ti) Should MAM consider making this investment?

Answer rating: 100% (QA)

Year Expected PV Present Value Cash Flow 15 2650000 10000 s 265000000 1 425000 08696 ... View the full answer