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Question #7 You are the owner of a small business. An opportunity to expand into a...

Question #7 You are the owner of a small business. An opportunity to expand into a new market niche arose. It requires an initial equipment investment of $400,000. You will finance the entire amount with a 5-year loan at 5% interest rate (annual payments). Depreciation will follow MACRS-3 Sales projections look very promising as shown below: • $200,000 in first year’s projected sales • Sales growth is expected to increase by 50% over the previous year’s sales • COGS is expected to remain at 30% of each years’ sales • Operating Expenses are $10,000 the first year and increase by 50% over the previous year’s Operating Expense.

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