In fourteen pages this paper presents NPV calculations in order to determine whether or not this auto body shop can profitably expand. Two sources are cited in the bibliography and there are 2 appendices also included.
Name of Research Paper File: CC6_KSacctCrafty.rtf
Unformatted Sample Text from the Research Paper:
is an automotive body shop currently operating with seven stalls in a leased building. The owner, Chris Craft, seeks to determine if pursuing expansion at a different location would
be profitable for the business. She intends to retire after ten years and will sell the business at the end of that term. For the present, she needs
to determine: (1) whether the expansion can be profitable; and (2) how she should finance it. These determinations cannot be made without assessing
costs in terms of present and future dollars. It is necessary to assess the proposed project in terms of total net present value in order to predict profitability and
compare the implications of financing decisions. Crafty should expand, using loan proceeds if the economic climate is strong, cash if it is not.
Assessing the Project Construction of the New Facility Potential Return Ms. Craft needs to consider all of these factors: * Initial cash outlay;
* Potential annual return; * Disposal values; and * Net present value of the total project. Initial Cash Outlay The new facility
will consist of 1,400 m2, at a construction cost of $1,022,000. Land cost is high at $340,000 per hectare, but Crafty Motors will need to ensure that there is
ample space for parking for a variety of purposes: work waiting for the body shop personnel, customer traffic (there will be two cars for each customer at various times),
employee parking and insurance adjuster parking. Since Ms. Craft wants to provide office space for insurance adjusters, she also will need to provide parking space for them that does