Advantage of economies of scale

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Reference no: EM137033

Q1. As your corporation, "When Life Gives You Lemons Inc.", is opinion about expanding the numeral of stands that it currently has from 15 to 20. It will cost $200,000 at present to complete the extension. The extension will eternally increase profits by $15,000 every year starting in one year's time. If the interest rate is 8% what is the PDV of the expansion project. Should the company do it

Q2. Overhead at the water cooler:" i think our company should take advantage of economies of scale by increasing our output, thereby spreading out our overhead costs." would you agree with this statement (assuming this person is not your boss)? Explain.

Reference no: EM137033

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