China importers would like to spend $215,000 to expand its warehouse. however, the company has a loan outstanding that must be repaid in 2.5 years and thus will need the $215,000 at that time. the warehouse expansion project is expected to increase the cash inflows by $60,000 in the first year, $140,000 in the second year, and $150,000 a year for the following 2 years. should the firm expand at this time? why or why not? multiple choice yes; a. because the money will be recovered in 2.10 years yes; b. because the money will be recovered in 1.87 years no; c. because the project never pays back no; d. because the money will not be recovered in time to repay the loan yes; e. because the money will be recovered in 1.69 years

Yes;a.because the money will be recovered in 2.10 years

Explanation:

Assume the company takes uses the loan to expand, how much time will it take to pay back the loan?

This can be expressed as;

T=F+S+T

where;

T=total cash flow needed to repay the loan

F=cash flow for the first year

S=cash flow for the second year

T=cash flow for needed in the third year to pay the loan

In our case;

T=$215,000

F=$60,000

S=$140,000

T=unknown

replacing;

215,000=60,000+140,000+T

T+200,000=215,000

T=215,000-200,000=15,000

The cash flow needed in the third year to pay the loan=$15,000

Determine how long it will take to raise $15,000 in the third year;

total cash flow in the third year=$150,000

1 year=$150,000

To raise $15,000=15,000/150,000=0.1 years

Total number of years=1+1+0.1=2.1 years

It will take 2.1 years to pay back the loan.

The firm should expand since the money will be recovered in 2.1 years even before the repayment period.

the answer choices are:

provides online banking

provides automatic payment services

provides home loans by using saving accounts

accept tax return refunds

hopefully someone can answer the question now lol

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