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
· Accounting rate of return on investment
· Payback
· Net present value
· 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.
· 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.
· 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.
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 mo
re 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 year
s
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
o
Accounting rate of return on investment
o
Payback
o
Net present value
o
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.
o
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.
o
Explain at leastfive no
n
–
financial items (e.g., culture, language, etc.), which may
impact the perceived desirability of each location.
o
Select the one location you recommend the Board invest in. Explain your
rationale in precise and detailed language.
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
o Accounting rate of return on investment
o Payback
o Net present value
o 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.
o 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.
o Explain at leastfive non-financial items (e.g., culture, language, etc.), which may
impact the perceived desirability of each location.
o Select the one location you recommend the Board invest in. Explain your
rationale in precise and detailed language.