Reference no: EM132452052

Garrison Appliances, Inc. is considering expanding its international presence. It sells 25% of all the toaster ovens sold in the United States but only 3% of the toaster ovens sold outside of the United States. The organization believes that it can sell more of its product if it has a production facility located overseas. Estimates concerning two possible locations, Mumbai and Bangalore, India follow:

Possible Location                                     Mumbai              Bangalore
Initial cash outlay                                   $5,000,000           $2,800,000
Useful life                                              20 years               20 years
Net cash inflows excluding depreciation       $1,100,000          $860,000
The cost of capital                                      9%                    9%
Tax rate                                                   40%                   40%

The Assignment:

Part 1: Prepare a spreadsheet using Excel or a similar program in which you compute the following for each proposed location

1. Accounting rate of return on investment
2. Payback
3. Net present value
4. Internal rate of return

Note: Be sure to view the media for this week before starting this Assignment.

Part 2: Utilizing Word or another word processing software program, prepare a written report for the Board of Directors. The intended audience is clear from the salutation and the language used throughout the report.

Question 1: Include a detailed and thorough explanation of the conclusion you reached regarding the feasibility of each proposal supported by the calculations prepared in Part 1.

Question 2: Explain at leastfive non-financial items (e.g., culture, language, etc.), which may impact the perceived desirability of each location.

• Select the one location you recommend the Board invest in. Explain your rationale in precise and detailed language