Answer to Question #38546 in Economics of Enterprise for marvi

Question

Mighty-lite inc., a manufacturer of plastic tables for institutional use is considering a capital spending program involving annual expenditures of $100,000 for each of the next five years. the firm estimates that its annual profit of $100,000 would increase by 50 percent when the capital program was completed. assuming the firm has a 20-year life and the appropriate interest rate is 12 percent, should the capital spending program be implemented?