*ANSWER IN DETAIL* Since the beginning of the year 2020, the COVID-19 pandemic, with the emergence of new variants of th

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*ANSWER IN DETAIL*
Since the beginning of the year 2020, the COVID-19 pandemic,
with the emergence of new
variants of the virus, looks set to become part of our everyday
life. While many businesses have
been negatively affected, there have also been some that have
benefitted, such as the producers of
face masks and antigen tests, to the extent that they are unable
to meet demand. As a result, many
companies involved in the production of these products are
looking for new investors to expand
the capacity of their facilities.
One such company intends to acquire new assets worth 2.2 million
euros, which, according to
their calculations, will generate a total of 180,000 euros in
the first year, and with a growth rate of
4% per year forever.
a. If the company requires a rate of return of 11%, should the
company invest in expanding
its capacities? Explain your decision.
b. Despite their expectations, the company is not sure that they
can continue to grow at 4%
per year. What rate of growth would they need to achieve to
reach the required 11% rate of
return?